CONSOLIDATION CAPITAL CORP
POS AM, 1998-01-21
BLANK CHECKS
Previous: CONSOLIDATION CAPITAL CORP, 8-K, 1998-01-21
Next: NORWEST ASSET SECURITIES CORP MORT PS THR CER SER 1997-12 TR, 15-15D, 1998-01-21



<PAGE>
 
    
 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 21, 1998     
                                                    
                                                 REGISTRATION NO. 333-42317     
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                               ----------------
                                 
                              POST EFFECTIVE     
                                 
                              AMENDMENT NO. 1     
                                       
                                    TO     
                                    FORM S-1
            REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
                               ----------------
                       CONSOLIDATION CAPITAL CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
                               ----------------
          DELAWARE                                        52-2054952
      (STATE OR OTHER            6770     
       JURISDICTIONOF        (PRIMARY STANDARD         (I.R.S. EMPLOYER
      INCORPORATION OR    INDUSTRIALCLASSIFICATION   IDENTIFICATION NO.)
       ORGANIZATION)            CODE NUMBER)
 
                   1747 PENNSYLVANIA AVENUE, N.W., SUITE 900
                             WASHINGTON, D.C. 20006
                                  202/955-5490
  (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
                   REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
 
                               ----------------
                              JONATHAN J. LEDECKY
               CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
                       CONSOLIDATION CAPITAL CORPORATION
                   1747 PENNSYLVANIA AVENUE, N.W., SUITE 900
                             WASHINGTON, D.C. 20006
                                  202/955-5490
 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
                             OF AGENT FOR SERVICE)
 
                               ----------------
                                   COPIES TO:
 
       F. TRAYNOR BECK, ESQUIRE                
  EXECUTIVE VICE PRESIDENT, GENERAL         LINDA L. GRIGGS, ESQUIRE     
        COUNSEL AND SECRETARY                MORGAN, LEWIS & BOCKIUS LLP
                                                 
  1747 PENNSYLVANIA AVE. N.W., SUITE          1800 M STREET, N.W.     
                 900                            
                                             WASHINGTON, D.C. 20036     
                                                     
        WASHINGTON D.C. 20006                     202/467-7245     
             202/955-5490
 
  APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after this registration statement becomes effective.
 
  If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
 
  If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
 
  If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
          
  If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
 
  THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
 
PROSPECTUS
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                       24,000,000 SHARES OF COMMON STOCK
 
                               ----------------
 
  This Prospectus covers 24,000,000 shares of common stock, $.001 par value
(the "Common Stock"), which may be offered and issued by Consolidation Capital
Corporation (the "Company") from time to time in connection with the
acquisition by the Company of other businesses, assets or securities. It is
expected that the terms of the acquisitions involving the issuances of
securities covered by this Prospectus will be determined by direct
negotiations with the owners or controlling persons of the businesses, assets
or securities to be acquired by the Company. No underwriting discounts or
commissions will be paid, although finder's fees may be paid from time to time
with respect to specific mergers or acquisitions. Any person receiving such
fees may be deemed to be an underwriter within the meaning of the Securities
Act of 1933, as amended (the "Securities Act").
   
  The Company's Common Stock is traded on the Nasdaq National Market under the
symbol "BUYR." As of January 20, 1998, the Company had 30,150,000 shares of
Common Stock outstanding. On January 20, 1998, the closing price of the Common
Stock was $19.50 per share. The Company is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and files reports and other information with the Securities and
Exchange Commission. See "Additional Information."     
 
  All expenses of this offering will be paid by the Company.
 
  SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR CERTAIN INFORMATION THAT SHOULD
BE CONSIDERED BY PROSPECTIVE INVESTORS.
 
                               ----------------
 
 THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
      EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
     SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
         PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
             REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
                
             The date of this Prospectus is January 21, 1998     
<PAGE>
 
  No person is authorized in connection with any offering made hereby to give
any information or to make any representation not contained in this
Prospectus, and, if given or made, such information or representation must not
be relied upon as having been authorized by the Company. This Prospectus does
not constitute an offer to sell or a solicitation of an offer to buy any of
the securities offered hereby to any person in any jurisdiction in which it is
unlawful to make such offer or solicitation to such person. Neither the
delivery of this Prospectus nor any offer or sale made hereunder shall under
any circumstance imply that the information contained herein is correct as of
any date subsequent to the date hereof.
 
                               ----------------
 
                               TABLE OF CONTENTS
 
<TABLE>   
<CAPTION>
                                                                          PAGE
                                                                          ----
<S>                                                                       <C>
Additional Information...................................................   2
Prospectus Summary.......................................................   3
Risk Factors.............................................................   6
Price Range of Common Stock..............................................  17
Dividend Policy..........................................................  17
Selected Pro Forma Combined Financial Data...............................  18
Management's Discussion and Analysis of Financial Condition and Results
 of Operations...........................................................  20
Business.................................................................  21
Management...............................................................  28
Executive Compensation...................................................  30
Certain Relationships and Related Party Transactions.....................  36
Principal Stockholders...................................................  37
Description of Capital Stock.............................................  38
Plan of Distribution.....................................................  39
Restrictions on Resale...................................................  39
Legal Matters............................................................  39
Experts..................................................................  39
Index to Financial Statements............................................ F-1
</TABLE>    
 
                            ADDITIONAL INFORMATION
   
   The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-1 (the "Registration
Statement") under the Securities Act and the rules and regulations promulgated
thereunder, with respect to the Common Stock offered hereby. This Prospectus
omits certain information contained in the Registration Statement, and
reference is made to the Registration Statement, and the exhibits and
schedules thereto, for further information with respect to the Company and the
Common Stock offered hereby. Statements contained in this Prospectus as to the
contents of any contract, agreement or other document filed as an exhibit to
the Registration Statement are not necessarily complete. Reference is made to
the respective exhibit for a more complete description of such statement,
which is qualified in its entirety by such reference. The Registration
Statement may be inspected and copied at the public reference facilities
maintained by the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549 and at the regional offices of the Commission
maintained at 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and
Seven World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials may be obtained from the Public Reference Section of the Commission,
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. In addition, registration statements and certain other
filings made with the Commission through its Electronic Data Gathering,
Analysis and Retrieval ("EDGAR") system are publicly available through the
Commission's site on the Internet's World Wide Web, located at
http://www.sec.gov. The Registration Statement, including all exhibits thereto
and amendments thereof, has been filed with the Commission through EDGAR.     
 
                                       2
<PAGE>
 
                               PROSPECTUS SUMMARY
 
  The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and the financial statements,
including the notes thereto, appearing elsewhere in this Prospectus.
Consolidation Capital Corporation is the successor to Ledecky Brothers L.L.C.
Hereinafter, except as otherwise indicated, Consolidation Capital Corporation
and Ledecky Brothers L.L.C. are referred to jointly as the "Company."
References in this Prospectus to operating and financial data of U.S. Office
Products Company are included herein in reliance upon reports filed by that
company with the Securities and Exchange Commission. Such operating and
financial data are not intended to be indicative of the possible future
operating results or financial position of the Company.
 
  Information contained in this Prospectus may contain forward-looking
statements, which can be identified by the use of forward-looking terminology
such as "may," "will," "expect," "intend," "plans," "anticipate," "estimate" or
"continue" or the negative thereof or other variations thereon or comparable
terminology. The matters described in "Risk Factors" and certain other factors
noted throughout this Prospectus and in any exhibits to the Registration
Statement of which this Prospectus is a part, constitute cautionary statements
identifying important factors with respect to any such forward-looking
statements, including certain risks and uncertainties, that could cause actual
results to differ materially, from those in such forward-looking statements.
 
THE COMPANY
   
  Founded in February 1997 by Jonathan J. Ledecky, Consolidation Capital
Corporation intends to build a consolidated enterprise with national market
reach through the acquisition and integration of multiple businesses in the
facilities management industry. Jonathan Ledecky is the Chairman and founder
and, until November 5, 1997, was the Chief Executive Officer, of U.S. Office
Products Company ("USOP"). While managing USOP, Jonathan Ledecky developed a
strategy of "corporate democracy," which he believes facilitated USOP's rapid
consolidation of more than 205 companies within seven different industry groups
in the office products and services industry. The corporate democracy approach
includes (i) a general policy of empowering local management and (ii) drawing
upon the contacts and expertise of local management by encouraging them to
identify acquisition candidates and to participate in the process of
integrating newly acquired companies into a consolidated enterprise. The
Company intends to employ a corporate democracy approach as one of its
principal operating strategies.     
   
  To date, the Company's operations have consisted of organizational
activities, research and analysis with respect to industry consolidations and
acquisition opportunities, efforts to refine the Company's business strategy
and meetings with potential acquisition candidates. The Company was initially
capitalized with $59,000, has generated no revenues to date other than
investment earnings on the proceeds of its initial public offering (the "IPO"),
and incurred losses of $103,000 from its founding in February 1997 through
September 30, 1997. The Company completed the IPO in December of 1997, selling
27,850,000 shares of Common Stock and 500,000 shares of Convertible Non-Voting
Common Stock and raising net proceeds of approximately $527,000,000.     
   
  On January 8, 1998, the Company entered into a letter of intent to acquire
Service Management USA and its affiliates ("Service Management"). Service
Management is a Sterling, Virginia-based provider of facilities management
services specializing in providing janitorial maintenance management services
to retailers and industrial and commercial clients in 39 states. See "--Pending
Acquisitions." Facilities management companies generally provide many products
and services needed for the routine operation and maintenance of a building.
These products and services include janitorial maintenance management services,
electrical contracting and maintenance, lighting equipment and services,
engineering services, parking facility management, security systems and
services, fire protection equipment and services, grounds keeping and
landscaping services, pest control and general equipment maintenance.     
 
  From 1994 until November 1997, Jonathan Ledecky served as Chief Executive
Officer of USOP and, in that capacity, was responsible for in excess of $1.7
billion in acquisitions of businesses in seven different industry
 
                                       3
<PAGE>
 
   
groups, including office supplies, office furniture, coffee and beverage
services, computer and telecommunications networks and services, print
management, corporate travel services and educational supplies. The Company
will seek to leverage the experience and expertise of Jonathan Ledecky, its
founder, Chairman and Chief Executive Officer, and the Company's management
team to become a leading consolidator of the facilities management industry.
The Company's management team consists of, in addition to Jonathan Ledecky:
Timothy C. Clayton, Executive Vice President, Chief Financial Officer and
Treasurer; F. Traynor Beck, Executive Vice President, General Counsel and
Secretary; and, David Ledecky, Executive Vice President and Chief
Administrative Officer. See "Management."     
   
  At the time of the IPO, the Company announced its intention to pursue
consolidation opportunities in one or more growing industries that are
fragmented with no clear market leader and that could benefit from economies of
scale. The Company believes that the facilities management industry has these
characteristics since it consists primarily of privately-held or family-owned
businesses, whose owner-operators desire liquidity and may be unable to access
the capital markets effectively or to expand beyond a local or regional base.
The Company has determined initially to focus exclusively on the facilities
management industry, rather than pursue consolidations in multiple, unrelated
industries, based on its view that the facilities management industry is a
large scale industry offering significant opportunities to expand into and
consolidate many sectors that offer products and services intended to enhance
the operating efficiency of retail, commercial and industrial clients.     
   
  During the last several years, property owners, such as real estate
investment trusts ("REITS"), have undergone consolidation. The Company believes
that, as the real estate industry undergoes further consolidation, the emerging
large-scale property owners will continue to develop an increased interest in
dealing with national providers of facilities management services. Property
owners also have increasingly turned to outsourcing many of the traditional
facilities management services that were once performed by the property owners'
own employees. This trend towards outsourcing allows property owners to focus
on their core competencies, reduce operating expenses, access technical
expertise of outside vendors and improve quality. The Company believes that the
consolidation of property owners and the increase in outsourcing of facilities
management services will present opportunities for the Company to (i) acquire
smaller, independent companies that are unable to compete with national
providers of facilities management services, (ii) expand through acquisitions
into new sectors of the facilities management industry, and (iii) broaden the
customer base of acquired companies.     
   
  The Company believes that it possesses substantial competitive advantages.
The Company expects to benefit from its ability to deploy rapidly its
significant financial resources and to use its publicly traded stock as
currency in selected acquisitions. Because the Company has significant cash and
cash equivalents, the Company's ability to acquire attractive companies is not
likely to be constrained initially by the need to access the capital markets.
Furthermore, the Company believes that its corporate democracy principles will
help it attract and acquire companies and will differentiate it from
traditional consolidators. The Company believes that its corporate democracy
approach generates significant competitive advantages because this approach
allows managers of the acquired companies to benefit from the economies of a
large organization while simultaneously retaining local operational control,
enabling them to provide flexible and responsive service to customers. Such an
approach could, however, limit possible consolidation efficiencies and
integration efforts. In addition, although the Company's management team has
experience in acquiring and consolidating businesses, it does not have
experience managing companies in the facilities management industry. The
Company, therefore, expects to rely in part upon management of acquired
companies or other individuals who are experienced in the facilities management
industry. See "Risk Factors--Competition," "Business--Strategy" and
"Management."     
   
  The Company will have broad discretion in identifying and selecting possible
acquisition candidates. Within the facilities management industry, the Company
intends to focus on the acquisition of businesses having some     
 
                                       4
<PAGE>
 
   
or all of the following characteristics: (i) stable cash flows and recurring
revenue streams from long-term customer relationships; (ii) low product
obsolescence and non-reliance on innovation or technology to drive recurring
revenue streams; (iii) long-term growth prospects for products and services
offered; (iv) a strong "franchise" or presence in the communities served by the
acquisition candidate; (v) an experienced management team comprised of
recognized industry leaders; (vi) an ability to retain, promote and motivate
management teams; (vii) favorable demographic trends within the local regions
serviced; and (viii) an underpenetrated market for products or services
provided by the acquisition candidate. Other than the pending acquisition of
Service Management, the Company has no present arrangements or understandings
with respect to the acquisition of any specific business. See "Risk Factors--
Appropriate Acquisitions May Not Be Available and Full Investment of Net
Proceeds May Be Delayed" and "Business--Strategy."     
 
  In general, the Company plans to acquire larger, established, high quality
companies, or "hubs," in high density, metropolitan areas, and additional
smaller companies, or "spokes," in secondary markets surrounding the hubs.
Where possible, the operations of the spokes will be integrated into the
operations of existing hubs, thereby enabling the Company to achieve the
economies of scale necessary to decrease operating cost and increase operating
margin. See "Risk Factors--Integration of Acquisitions."
 
  Upon integration of acquired companies, the Company believes that it will be
able to achieve operating efficiencies by combining administrative functions,
eliminating redundant facilities, implementing system technology improvements,
and purchasing products and services in large volumes. Each of the acquired
companies will continue to manage all functions that "touch the customer,"
including sales, marketing, customer service, credit and collections. The
Company will manage functions such as purchasing, accounting, inventory
management, human resources and finance centrally where it can leverage its
size and scale. In addition, the Company believes that it may achieve certain
synergies through strategic marketing and cross-selling by acquired companies.
 
  The Company's principal executive offices are located at 1747 Pennsylvania
Avenue, N.W., Suite 900, Washington D.C. 20006, and its telephone number is
202-955-5490.
   
PENDING ACQUISITION     
   
  On January 8, 1998, the Company entered into a letter of intent to acquire
Service Management, a Sterling, Virginia-based provider of facilities
management services. Service Management was founded in 1982 and has become a
leading facilities management company specializing in providing janitorial
maintenance management services to retailers and industrial and commercial
clients in 39 states. Some of Service Management's major clients include the
United Parcel Service, K-Mart, Wal-Mart, Target, Sports Authority, CVS, Kroger,
Shaw's and Bi-lo grocery stores. Service Management had revenues for the nine
months ended September 30, 1997 of approximately $18.8 million.     
   
  The letter of intent with Service Management provides for consideration of $9
million payable in cash and $3 million payable in shares of Common Stock valued
at the closing price of the Common Stock on the date the letter of intent was
signed. In addition, there is the potential for the payment of up to an
additional $13 million, consisting of 50% in cash and 50% in shares of Common
Stock, based upon a combination of the earnings before interest and taxes of
Service Management during the 12 months subsequent to the Company's completion
of the acquisition of Service Management, and the revenues of Service
Management, including the revenues of certain companies identified by Service
Management that may be acquired by the Company in the future, during the 24
months subsequent to the completion of the acquisition of Service Management.
No assurance can be given that the acquisition of Service Management will be
completed or that it will be completed on the terms described above.     
   
  The Company is in discussions with additional acquisition candidates and may
from time to time enter into letters of intent or agreements in principle with
respect to the acquisition of such businesses. No assurance can be given,
however, that the Company will complete additional acquisitions.     
 
                                       5
<PAGE>
 
                                 RISK FACTORS
 
  An investment in the shares of Common Stock offered hereby involves a high
degree of risk. Prospective investors should consider carefully the following
risk factors, in addition to the other information contained in this
Prospectus, in evaluating an investment in the shares of Common Stock offered
hereby.
 
  The risk factors set forth below and elsewhere in this Prospectus should be
read as accompanying all forward-looking statements made in this Prospectus.
These forward-looking statements can be identified by the use of forward-
looking terminology such as "may," "will," "expect," "intend," "plans,"
"anticipate," "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. The Company's actual results
could differ materially from those anticipated in such forward-looking
statements, for the reasons set forth below and for other reasons.
 
NO PRESENT SOURCE OF REVENUES
   
  The Company was founded in February 1997 and completed its IPO in December
1997. To date, its activities have consisted of organizational activities,
research and analysis with respect to acquisition and consolidation
opportunities, efforts to refine the Company's business strategy and meetings
with potential acquisition candidates. The Company intends to build a
consolidated enterprise with national market reach through the acquisition and
integration of multiple businesses in the facilities management industry. It
will not generate any revenues other than interest income on the proceeds from
the IPO until, at the earliest, the consummation of an acquisition of a
business after which its ability to generate revenues and earnings (if any)
will be directly dependent upon the operating results of such acquired
business and any additional acquisitions and the successful integration and
consolidation of those businesses. Other than the pending acquisition of
Service Management, the Company has no present arrangements or understandings
with any prospective acquisition candidates.     
 
CONFLICTS OF INTEREST
   
  Jonathan Ledecky serves as both the Chairman and Chief Executive Officer of
the Company and the Chairman and an executive officer of USOP. On January 13,
1998, Jonathan Ledecky entered into a Services Agreement with USOP, effective
upon the completion of USOP's announced restructuring which involves a self-
tender and the incurrence of indebtedness related thereto, the spin-off of
four of USOP's divisions and an equity investment. If the restructuring is
completed, Jonathan Ledecky will resign as the Chairman and as an executive
officer of USOP, but will continue to provide mutually agreed advisory
services to USOP and the companies that are being spun off from USOP and the
Services Agreement will supersede Jonathan Ledecky's amended and restated
employment agreement with USOP, described below (the "USOP Employment
Agreement"). If USOP's announced restructuring is not completed, the USOP
Employment Agreement will remain in effect. USOP has announced that the
proposed restructuring is not expected to be completed until the second
calendar quarter of 1998.     
   
  As long as Jonathan Ledecky serves as a director and an executive officer of
both the Company and USOP, Jonathan Ledecky owes a duty of loyalty and a duty
of care under Delaware law to both companies. These duties obligate him to
present certain business opportunities to the company to which he owes the
duties before pursuing such opportunities himself. There is no agreement among
Jonathan Ledecky, the Company and/or USOP delineating Jonathan Ledecky's
duties to each company or resolving potential conflicts between his
conflicting duties and obligations, although USOP has approved the Company's
entry into the facilities management industry.     
   
  Under the USOP Employment Agreement, Jonathan Ledecky is obligated to assist
in, among other things, identifying and pursuing new business and investment
opportunities and acquisitions for USOP, developing and providing strategic
plans and growth analyses for USOP, providing structuring, capitalization,
restructuring, recapitalization and reorganization advice to USOP and
assisting in implementing such advice, and interfacing with the investment and
financial community on an as-needed basis. While Jonathan Ledecky is not
responsible for the day-to-day oversight of USOP, his positions as an
executive officer and Chairman of the Board of USOP     
 
                                       6
<PAGE>
 
   
may nonetheless result in competition between USOP matters and Company matters
for his time and professional attention, and may result in or exacerbate
conflicts as to his obligations to present business opportunities to one
company or another, or to pursue such opportunities for one company or
another. The USOP Employment Agreement and the Services Agreement also contain
restrictions on Jonathan Ledecky's ability to recruit or employ current and
certain former employees of USOP. This restriction could present a possible
conflict between Jonathan Ledecky's actions and recommendations to retain
employees and his efforts to employ suitable individuals with the Company. In
addition, the USOP Employment Agreement and the Services Agreement recite that
in the course of Jonathan Ledecky's employment with USOP he has become
familiar with and aware of certain information regarding USOP's operations
that the agreements describe as a trade secret of USOP. Were Jonathan Ledecky
to be held wrongfully to have disclosed any trade secret information to the
Company or others in violation of his obligations to USOP, he could face
liability for such disclosure, and the Company could face liability for
inducing or aiding in any such alleged violation. Finally, under the USOP
Employment Agreement and the Services Agreement, Jonathan Ledecky is not
prohibited from serving as an officer, director or employee of or consultant
to the Company, provided that such actions do not otherwise breach his
obligations under the USOP Employment Agreement or the Services Agreement, as
applicable.     
   
  For as long as the USOP Employment Agreement is in effect, Jonathan Ledecky
owes duties of loyalty and care and has contractual obligations to both the
Company and USOP simultaneously. If and when the Services Agreement supersedes
the USOP Employment Agreement, Jonathan Ledecky will have contractual
obligations to the Company, USOP and the companies that are being spun off
from USOP, and he may be unable in certain circumstances to fulfill his duties
of loyalty and care and his contractual obligations to one company without
allegedly breaching them to the other. Any alleged breach could result in
litigation by or on behalf of the offended company under any of a number of
possible legal theories, including seeking damages from Jonathan Ledecky for
the purported breach or from the other such company for tortiously interfering
with the offended company's contractual relationship with Jonathan Ledecky or
for inducing him to breach his duties to the offended company. The conduct or
response to any such litigation could consume significant management attention
and resources, and the defense, settlement or final adjudication of any such
litigation could have a material adverse effect on the Company's business,
financial condition and/or results of operations.     
   
  In addition, Jonathan Ledecky is the Non-Executive Chairman of the Board of
U.S.A. Floral Products, Inc. ("USA Floral"), the Non-Executive Chairman of the
Board of U.S. Leasing, Inc. ("US Leasing") and a prospective minority investor
in Unison Partners, Inc. ("Unison Partners"). Each of USA Floral, US Leasing
and Unison Partners is, or is seeking to become, a consolidator of businesses
in one or more industries. Jonathan Ledecky may thus have conflicts of
interest in determining to which of these entities, if any, a particular
relevant business opportunity should be presented.     
 
DEPENDENCE ON KEY PERSONNEL
 
  The Company believes that its success will depend principally upon the
experience of Jonathan J. Ledecky, its founder, Chairman and Chief Executive
Officer. In addition, the Company believes that its success will depend to a
significant extent upon Timothy Clayton, the Company's Executive Vice
President, Chief Financial Officer and Treasurer; F. Traynor Beck, the
Company's Executive Vice President, General Counsel and Secretary; and David
Ledecky, the Company's Executive Vice President and Chief Administrative
Officer.
   
  Although Jonathan Ledecky has substantial experience in acquiring and
consolidating businesses and Messrs. Clayton and Beck have substantial
experience with such transactions on behalf of their prior clients, none of
them has any experience in managing companies formed for the specific purpose
of consolidating one or more industries (other than Jonathan Ledecky's
experience in managing USOP) or in managing businesses in the facilities
management industry. As a result, the Company likely will depend on the senior
management of any significant business it acquires in the future. Such
acquired senior management may not be suitable to the Company's business model
or combined operations.     
 
                                       7
<PAGE>
 
  If the Company loses the services of one or more of its current executives,
the Company's business could be adversely affected. The Company may not
successfully recruit additional personnel and any additional personnel that
are recruited may not have the requisite skills, knowledge or experience
necessary or desirable to enhance the incumbent management. The Company does
not intend to maintain key man life insurance with respect to any of its
executive officers. See "Management."
 
ALLOCATION OF MANAGEMENT TIME
   
  Pursuant to the CCC Employment Agreement, Jonathan Ledecky is required to
devote the substantial majority of his business time, attention and efforts to
the business of the Company. Pursuant to the USOP Employment Agreement,
Jonathan Ledecky is required to devote a portion of his business time,
attention and efforts to promote and further the business of USOP. Upon the
effectiveness of the Services Agreement, Jonathan Ledecky will be required to
provide mutually agreed advisory services to USOP and the companies that are
being spun off from USOP. In addition, Jonathan Ledecky anticipates devoting
time to his other directorships and professional pursuits. The competing
claims upon Jonathan Ledecky's time and energies could divert his attention
from the affairs of the Company, placing additional demands on the Company's
other management resources. Pursuant to their employment agreements with the
Company, each of the other executive officers of the Company is required to
devote his full business time, attention and efforts to the business of the
Company. The efforts of all or any of these individuals may not be sufficient
to meet the Company's management needs.     
 
APPROPRIATE ACQUISITIONS MAY NOT BE AVAILABLE AND FULL INVESTMENT OF NET
PROCEEDS MAY BE DELAYED
 
  The results of the Company's planned operations are dependent upon the
Company's ability to identify, attract and acquire desirable acquisition
candidates, which may take considerable time. The Company may not be
successful in identifying, attracting or acquiring desirable acquisition
candidates, in integrating such candidates into the Company or in realizing
profits from any acquisition candidates, if acquired. The failure to complete
acquisitions or to operate the acquired companies profitably would have a
material adverse effect on the Company's business, financial condition and/or
results of operations.
 
  Pending their possible application in acquiring businesses, the net proceeds
of the IPO have been invested in readily marketable, interest-bearing,
investment grade securities. Consequently, until such time as the Company
acquires acquisition candidates, the proceeds of the IPO will yield only that
rate of return earned by such interest-bearing securities. In addition, a
portion of the net proceeds of the IPO are being used to pay corporate
overhead and administrative costs, which the Company estimates will initially
be approximately $5.0 million on an annualized basis, representing the costs
of rent, salaries and employee benefits, insurance, and other miscellaneous
expenses.
 
RISKS ASSOCIATED WITH CONSOLIDATION STRATEGY
   
  To date, the Company's activities have consisted of organizational
activities, conducting research and analysis principally focused on
identifying fragmented industries that are potentially available for
consolidation, refining the Company's business strategy and meeting with
acquisition candidates. In connection with its research and analysis, the
Company has had general discussions with numerous businesses within several
different industries. The Company has only recently identified the facilities
management industry as the industry on which it will initially focus and
Service Management as its initial acquisition candidate. Accordingly,
investors have no basis on which to evaluate the possible merits or risks of
any future acquisition candidates' operations and prospects. Although
management of the Company will endeavor to evaluate the risks inherent in any
particular acquisition candidate, the Company may not properly ascertain all
of such risks. See "Business--Strategy."     
   
  The Company's management team is utilizing the proceeds of the IPO to
accelerate the research and analysis that has been performed to date to
identify and select prospective acquisition candidates. Other than the     
 
                                       8
<PAGE>
 
   
pending acquisition of Service Management, the Company has no present
arrangements or understandings with any prospective acquisition candidates.
Management of the Company has virtually unrestricted flexibility in
identifying and selecting prospective acquisition candidates and broad
discretion with respect to the specific application of the net proceeds of the
IPO. Management may not succeed in selecting acquisition candidates that will
be profitable or that can be integrated successfully. Although the Company
intends to scrutinize closely the management of a prospective acquisition
candidate in connection with evaluating the desirability of effecting a
business combination, the Company's assessment of management may not prove to
be correct. The Company may enlist the assistance of other persons to assess
the management of acquisition candidates (including, without limitation,
investment bankers, brokers, accountants and other advisers who have rendered
or may in the future render services to USOP). See "--Conflicts of Interest,"
"Business--Conflicts of Interest" and "Certain Relationships and Related Party
Transactions."     
   
  One of the key elements of the Company's internal growth strategy is to
improve the profitablilty and increase the revenues of acquired businesses.
The Company will seek to improve the profitability and increase the revenues
of acquired businesses by various means, including combining administrative
functions, eliminating redundant facilities, implementing system and
technology improvements, purchasing products and services in large quantities
and cross-selling products and services. The Company's ability to increase
revenues will be affected by various factors, including the Company's ability
to expand the products and services offered to the customers of acquired
companies, develop national accounts and attract and retain a sufficient
number of employees to perform the Company's services. There can be no
assurance that the Company's internal growth strategies will be successful.
See "Business--Strategy."     
 
INTEGRATION OF ACQUISITIONS
 
  The Company's business model contemplates an aggressive and rapid
acquisition program. No assurance can be given that the Company will be able
to successfully integrate its future acquisitions without substantial costs,
delays or other problems. The costs of such acquisitions and their integration
could have an adverse effect on short-term operating results. Such costs could
include severance payments to employees of such acquired companies,
restructuring charges associated with the acquisitions and other expenses
associated with a change of control, as well as non-recurring acquisition
costs including accounting and legal fees, investment banking fees,
recognition of transaction-related obligations and various other acquisition-
related costs. Any failure by the Company to make acquisitions would have a
material adverse effect on the Company's business, financial condition and
results of operations. Moreover, the Company may be unable to replicate the
success in consolidating various industries that has been achieved by other
consolidators, including USOP.
   
  The Company may not be able to execute successfully its consolidation
strategy or anticipate all of the changing demands that consolidation
transactions will impose on its management personnel, operational and
management information systems and financial systems. The integration of newly
acquired companies may also lead to diversion of management attention from
other ongoing business concerns. In addition, the rapid pace of acquisitions
may adversely affect the Company's efforts to integrate acquisitions and
manage those acquisitions profitably. Moreover, it is possible that neither
management of the Company nor management of any of the acquired companies will
have the necessary skills to manage a company intending to implement an
aggressive acquisition program. The Company may seek to recruit additional
managers to supplement the incumbent management of the acquired companies but
the Company may not have the ability to recruit additional managers with the
skills necessary to enhance the management of the acquired companies. Any or
all of these factors could have a material adverse effect on the Company's
business, financial condition and/or results of operations.     
 
RISKS RELATED TO ACQUISITION FINANCING; ADDITIONAL DILUTION; LEVERAGE
 
  The Company intends to use substantially all of its resources for
acquisitions and, to a much lesser extent, for general corporate expenses. The
timing, size and success of the Company's acquisition efforts and any
associated capital commitments cannot be readily predicted. The Company
currently intends to finance future
 
                                       9
<PAGE>
 
acquisitions by using shares of its Common Stock, cash, borrowed funds or a
combination thereof. If the Common Stock does not maintain a sufficient market
value, or if potential acquisition candidates are otherwise unwilling to
accept Common Stock as part of the consideration for the sale of their
businesses, the Company may be required to use more of its cash resources or
more borrowed funds, in each case if available, in order to initiate and
maintain its acquisition program. If the Company does not have sufficient cash
resources, its growth could be limited unless it is able to obtain additional
capital through debt or equity financings.
   
  As of January 20, 1998, the Company had cash and cash equivalents of
approximately $527.0 million. In addition, BT Alex. Brown Incorporated ("BT")
has provided the Company with a letter, dated October 29, 1997, in which BT
confirms that, upon the Company's request, BT commits to use its best efforts
to arrange and syndicate a $100 million senior secured revolving bank credit
facility to be used by the Company for future acquisitions or other capital
requirements. This bank credit facility may, under certain conditions to be
mutually agreed upon, be increased up to a $500 million facility. The terms
and conditions of any BT debt facility, including the fee arrangements, are
subject to mutual agreement. Use of any such facility would likely be subject
to conditions customary to facilities of this type, including restrictions on
other indebtedness, mergers, acquisitions, dispositions and similar
transactions. The Company may not succeed in obtaining a facility of any size
or in negotiating terms satisfactory to the Company. Except for this proposed
bank credit facility, the Company currently has no plan or intention to obtain
additional capital through debt or equity financing during the next 12 months.
If and when the Company requires additional financing for its acquisition
program or for other capital requirements, the Company may be unable to obtain
any such financing on terms that the Company deems acceptable.     
 
  Among the possible adverse effects of borrowings to consummate acquisitions
or for other capital requirements are: (i) if the Company's operating revenues
after acquisitions were to be insufficient to pay debt service, there would be
a risk of default and foreclosure on the Company's assets; (ii) if a loan
agreement contains covenants that require the maintenance of certain financial
ratios or reserves, and any such covenant were breached without a waiver or
renegotiation of the terms of that covenant, then the lender could have the
right to accelerate the payment of the indebtedness even if the Company has
made all principal and interest payments when due; (iii) if the terms of a
loan did not provide for amortization prior to maturity of the full amount
borrowed and the "balloon" payment could not be refinanced at maturity on
acceptable terms, the Company might be required to seek additional financing
and, to the extent that additional financing were not available on acceptable
terms, to liquidate its assets; and (iv) if the interest rate on a loan is
variable, the Company would be subject to interest rate fluctuations which
could increase the Company's debt service obligations. The level of
indebtedness that the Company may incur cannot be predicted and will depend
upon these factors and the relevant business characteristics of the
acquisition candidates for which such indebtedness will be undertaken.
   
  The Company currently has 250,000,000 authorized shares of Common Stock. As
of January 20, 1998, the Company had 30,150,000 shares of Common Stock
outstanding. In addition, the Company has securities outstanding that are
convertible into or exercisable for 5,140,000 shares of Common Stock,
consisting of (i) options to purchase 1,500,000 shares of Common Stock granted
under the Consolidation Capital Corporation 1997 Long-Term Incentive Plan (the
"Incentive Plan"), (ii) options to purchase 60,000 shares of Common Stock
granted under the Consolidation Capital Corporation 1997 Non-Employee
Directors' Stock Plan (the "Directors' Plan"), (iii) 500,000 shares of Common
Stock issuable upon the conversion of the 500,000 shares of Convertible Non-
Voting Common Stock currently outstanding, (iv) 1,130,000 shares of Common
Stock issuable upon the exercise of warrants issued to Friedman, Billings,
Ramsey & Co., Inc., the representative of the underwriters in the Company's
IPO (the "Representative"), and (v) 1,950,000 shares of Common Stock issuable
upon the exercise of warrants issued to Jonathan Ledecky in connection with
the IPO. The Company has reserved (i) 1,213,500 shares for issuance pursuant
to awards available to be made under the Incentive Plan, (ii) 240,000 shares
for issuance pursuant to options available to be granted under the Directors'
Plan, and (iii) 1,000,000 shares for issuance pursuant to the Consolidation
Capital Corporation 1997 Employee Stock Purchase Plan (the "Purchase Plan").
Accordingly, as of January 20, 1998, the Company had 212,256,500 authorized
but unissued and unreserved shares of Common Stock. Consequently, subject to
the rules and regulations of The Nasdaq     
 
                                      10
<PAGE>
 
National Market, the Company will be able to finance acquisitions by issuing
significant amounts of additional shares of Common Stock without obtaining
shareholder approval of such issuances. To the extent the Company uses Common
Stock for all or a portion of the consideration to be paid for future
acquisitions, dilution may be experienced by existing stockholders. Moreover,
the issuance of additional shares of Common Stock may have a negative impact
on earnings per share and may negatively impact the market price of the Common
Stock. See "Use of Proceeds" and "Dilution."
   
COMPETITION AND INDUSTRY CONSOLIDATION     
          
  The facilities management industry is highly competitive. It is
characterized by both large national and multi-national organizations
providing a wide variety of facilities management services to their customers
and numerous smaller companies providing fewer services in limited geographic
areas. In addition, property management companies are beginning to enter the
facilities management business. Barriers to entry to the markets for certain
facilities management services, such as janitorial and custodial services, are
low, and the Company expects to compete against numerous smaller service
providers, many of which may have more experience in and knowledge of the
local market for such services. Such smaller service providers may also have
lower overhead cost structures and may be able to provide their services at
lower rates than the Company. In these same markets, the Company also expects
to face large competitors that offer multiple services and that are willing to
accept lower profit margins in order to capture market share. As a result of
this competition, the Company may lose customers or have difficulty acquiring
new customers. As a result of competitive pressures on the pricing of
facilities management services, the Company's revenues or margins may decline.
       
  The Company also expects to face significant competition to acquire
facilities management businesses from larger companies that currently pursue,
or are expected to pursue, acquisitions as part of their growth strategies and
as the industry undergoes continuing consolidation. Such competition could
lead to higher prices being paid for acquired companies.     
   
  The Company believes that the facilities management industry will undergo
considerable consolidation during the next several years. The Company expects
that, in response to such consolidation and in light of the Company's
significant financial resources, it will consider from time to time additional
strategies to enhance stockholder value. These include, among others,
strategic alliances and joint ventures; purchase, sale and merger transactions
with other large companies; and other similar transactions. In considering any
of these strategies, the Company will evaluate the consequences of such
strategies, including, among other things, the potential for leverage that
would result from such a transaction, the tax effects of the transaction, and
the accounting consequences of the transaction. In addition, such strategies
could have various other significant consequences, including changes in
management, control or operational or acquisition strategies of the Company.
There can be no assurance that any one of these strategies will be undertaken,
or that, if undertaken, any such strategy will be completed successfully.     
   
DEPENDENCE ON HOURLY WAGE, TECHNICAL AND UNION EMPLOYEES     
   
  The Company's ability to increase productivity and profitability will depend
upon its ability to recruit, train and retain large numbers of hourly wage or
skilled employees necessary to meet the Company's service requirements.
Competition for such employees has led to increased hourly wage levels and
employee turnover. Inability to recruit, train and retain such employees at
competitive wage rates could increase the Company's operating costs. In
addition, to the extent the Company expands into sectors of the facilities
management industry that require highly skilled technicians, such as
electrical contracting and maintenance and engineering services, the Company
will require an adequate supply of skilled technicians. There can be no
assurance that the Company will be able to maintain an adequate labor force
necessary to efficiently operate its business or that the Company's labor
expenses will not increase as a result of a shortage in the supply of hourly
wage or skilled employees. In addition, many sectors of the facilities
management industry involve unionized employees. As these union contracts
expire, the Company may be required to renegotiate them in an environment of
increasing wage rates. There can be no assurance that the Company will be able
to renegotiate union contracts on terms favorable to the Company or without
experiencing a work stoppage.     
 
                                      11
<PAGE>
 
   
DEPENDENCE ON SUBCONTRACTORS     
   
  Many businesses in the facilities management industry are largely dependent
on subcontractors to provide optimum service to their customers. Such reliance
reduces the ability of a facilities management business to directly control
both its workforce and the quality of services provided. There can be no
assurance that the Company, to the extent that the facilities management
businesses it acquires are heavily dependent on subcontractors, will be able
to control its workforce and the quality of services provided in a
satisfactory manner.     
   
LENGTH OF CONTRACTS     
   
  Many businesses in the facilities management industry perform the majority
of their work for customers under contracts with termination clauses
permitting the customer to cancel the contract on 30 to 90 days' notice. While
many businesses in the facilities management industry maintain long-standing
relationships with many of their customers and experience a low customer
turnover rate, there can be no assurance that the Company will retain
customers, that customers of acquired companies will not exercise their rights
to terminate their contracts prior to expiration or that the Company will be
successful in negotiating new contracts with customers as such contracts
expire.     
   
POTENTIAL ENVIRONMENTAL LIABILITY; GOVERNMENT REGULATION     
   
  The nature of the facilities management industry necessarily involves the
transport, storage, use and disposal of cleaning solvents, lubricants,
chemicals and other hazardous materials by employees to, on and around the
facilities of the facilities management company and its customers. Such
activities are subject to stringent and changing federal, state and local
regulation and present the potential for liability of the Company for the
actions of its employees in handling such materials. In addition, the exposure
of any employees to these materials may give rise to claims by employees
against the Company. There can be no assurance that compliance with
governmental regulations or liability related to hazardous materials will not
have a material adverse effect on the Company's financial condition or results
of operations.     
   
  Due to the nature of the facilities management industry, the Company's
operations will be subject to a variety of federal, state, county and
municipal laws, regulations and licensing requirements, including labor,
employment, immigration, health and safety and environmental regulations.
Changes in such laws, regulations and licensing requirements may constrain the
Company's ability to provide services to customers or increase the costs of
such services. In addition, competitive pricing conditions in the industry may
constrain the Company's ability to adjust its billing rates to reflect any
such increased costs.     
   
LIABILITY CLAIMS AND INSURANCE COVERAGE     
   
  The nature of the facilities management industry may expose the Company to
liability for employee negligence and harassment, injuries, including workers'
compensation claims, and omissions. Facilities management companies generally
carry insurance of various types, including workers' compensation, employment
practices, vehicle and general liability coverage. While the Company will seek
to maintain appropriate levels of insurance, there can be no assurance that
the Company will avoid material claims or adverse publicity related thereto.
There can also be no assurance that the Company's insurance will be adequate
to cover the Company's liabilities or that such insurance coverage will remain
available at acceptable costs. A successful claim brought against the Company
for which coverage is denied or which is in excess of its insurance coverage
could have a material adverse effect on the Company's financial condition or
results of operations.     
       
       
       
CONSIDERATION FOR OPERATING COMPANIES MAY EXCEED ASSET VALUE; AMORTIZATION
CHARGES
   
  The purchase prices of the Company's acquisitions will not be established by
independent appraisals, but generally will be established through arms'-length
negotiations between the Company's management and representatives of such
companies. The consideration paid for each such company will be based
primarily on the value of such company as a going concern and not on the value
of the acquired assets. Valuations of these     
 
                                      12
<PAGE>
 
companies determined solely by appraisals of the acquired assets are likely to
be less than the consideration that is paid for the companies. The future
performance of such companies may not be commensurate with the consideration
paid.
 
  The Company expects to incur significant amortization charges resulting from
consideration paid in excess of the fair value of the net assets of the
companies acquired in business combinations accounted for under the purchase
method of accounting ("goodwill"). The Company will be required to amortize
the goodwill from acquisitions accounted for under the purchase method over a
period of time, with the amount amortized in a particular period constituting
an expense that reduces the Company's net income for that period. The amount
amortized, however, will not give rise to a deduction for tax purposes. As an
example of the degree to which amortization of goodwill relates to the total
purchase prices paid for acquisitions, USOP had recorded approximately $659.0
million of goodwill and other intangibles in connection with the $1.7 billion
in acquisitions made through April 27, 1997, and incurred $14.2 million in
amortization charges for its fiscal year ended April 27, 1997. The Company's
amortization charges, however, could be substantially greater than or less
than the amount of amortization charges incurred by USOP. A reduction in net
income resulting from amortization charges may have a material and adverse
impact upon the market price of the Company's Common Stock.
 
INVESTMENT COMPANY ACT CONSIDERATIONS
   
  The regulatory scope of the Investment Company Act of 1940 ("Investment
Company Act") extends generally to companies engaged primarily in the business
of investing, reinvesting, owning, holding or trading in securities. The
Investment Company Act also may apply to a company which does not intend to be
characterized as an investment company but which, nevertheless, engages in
activities that bring it within the Investment Company Act's definition of an
investment company. The Company believes that its anticipated principal
activities, which will involve acquiring control of operating companies, will
not subject the Company to registration and regulation under the Investment
Company Act. Nonetheless, since the Company currently falls within the
Investment Company Act's definition of an investment company, it will rely on
a safe harbor rule that exempts the Company from the Investment Company Act
for a period of one year from the date of the IPO, provided certain conditions
are met. Thereafter, the Company intends to remain exempt from investment
company regulation either by not engaging in investment company activities or
by qualifying for the exemption from investment company regulation available
to any company that has no more than 45% of its total assets invested in, and
no more than 45% of its income derived from, investment securities, as defined
in the Investment Company Act.     
 
  There can be no assurance that the Company will be able to avoid
registration and regulation as an investment company. In the event the Company
is unable to avail itself of an exemption or safe harbor from the Investment
Company Act, the Company may become subject to certain restrictions relating
to the Company's activities, as noted below, and contracts entered into by the
Company at such time that it was an unregistered investment company may be
unenforceable. The Investment Company Act imposes substantive requirements on
registered investment companies including limitations on capital structure,
restrictions on certain investments, prohibitions on transactions with
affiliates and compliance with reporting, record keeping, voting, proxy
disclosure and other rules and regulations. Registration as an investment
company could have a material adverse effect on the Company.
 
ADVERSE CHANGES IN GENERAL ECONOMIC CONDITIONS CAN ADVERSELY AFFECT COMPANY'S
BUSINESS
   
  The Company's success will be dependent upon the general economic conditions
in the geographic areas in which a substantial number of its operating
businesses are located. Adverse changes in national economic conditions or in
regional economic conditions in which the Company conducts substantial
business likely would have an adverse effect on the operating results of one
or more of the acquired companies and, accordingly, on the Company's business,
financial condition and/or results of operations. To the extent the Company
targets owners of office buildings as potential clients, the Company's success
will be dependent upon occupancy levels at such buildings. Lower occupancy
rates could have a material adverse affect on, among other sectors of the
facility management industry, janitorial maintenance management services and
parking facility management services.     
 
                                      13
<PAGE>
 
RISKS RELATING TO INTERNATIONAL EXPANSION
 
  Although it is not currently anticipated, if the Company were to expand into
international markets, it may face additional risks relating to such matters
as currency exchange rate fluctuations, new and different legal and regulatory
requirements, political and economic risks relating to the stability of
foreign governments and their trading relationships with the United States,
difficulties in staffing and managing foreign operations, differences in
financial reporting, differences in the manner in which different cultures do
business, operating difficulties and other factors. The many difficulties and
risks inherent in international operations could result in a material adverse
impact upon the Company's business, financial condition and results of
operations.
 
POTENTIAL REGULATORY REQUIREMENTS
   
  Many of the Company's acquisitions will be subject to the requirements of
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), which could adversely affect the pace of the Company's acquisitions in
an industry or its ability to consolidate an industry to the extent the
Company believes appropriate, depending upon the industry being consolidated.
Among the requirements that may be imposed in order to obtain approval of an
acquisition under the HSR Act may be a requirement that the Company divest a
portion of its then-existing operations or those of the acquisition candidate,
which may render a given acquisition disadvantageous. In addition,
acquisitions of businesses in regulated industries would subject the Company
to regulatory requirements which could limit the Company's flexibility in
growing and operating its businesses.     
 
TAX CONSIDERATIONS
 
  As a general rule, federal and state tax laws and regulations have a
significant impact upon the structuring of business combinations. The Company
will evaluate the possible tax consequences of any prospective business
combination and will endeavor to structure the business combination so as to
achieve the most favorable tax treatment to the Company, the acquisition
candidate and their respective stockholders. Nonetheless, the Internal Revenue
Service (the "IRS") or appropriate state tax authorities may not ultimately
agree with the Company's tax treatment of a consummated business combination.
To the extent that the IRS or state tax authorities ultimately prevail in
recharacterizing the tax treatment of a business combination, there may be
adverse tax consequences to the Company, the acquisition candidate and/or
their respective stockholders.
 
POTENTIAL INFLUENCE OF EXISTING STOCKHOLDER
   
  As of January 20, 1998, Jonathan Ledecky, the Company's founder, Chairman
and Chief Executive Officer, owned beneficially approximately 14.9% of the
outstanding shares of Common Stock. The Company's executive officers and
directors, if acting together, may be able to significantly influence the
election of directors and matters requiring the approval of the stockholders
of the Company. This concentration of ownership may also have the effect of
delaying or preventing a change in control of the Company. See "Principal
Stockholders."     
 
SHARES ELIGIBLE FOR FUTURE SALE
   
  As of January 20, 1998, the Company had 30,150,000 shares of Common Stock
outstanding. Of the shares of Common Stock sold in the IPO, 27,600,000 shares
are freely tradeable without restriction or further registration under the
Securities Act of 1933, as amended (the "Securities Act"), except that any
shares purchased by an "affiliate" of the Company, as that term is defined in
Rule 144 ("Rule 144") promulgated under the Securities Act, may generally be
sold only in compliance with Rule 144, as described below.     
 
  All of the remaining 2,550,000 outstanding shares of Common Stock are owned
by Jonathan Ledecky, and are available for resale, subject to compliance with
Rule 144 and subject to a contractual restriction on transfer for 180 days on
all of the shares of Common Stock that he owns and a contractual restriction
on transfer for one year on 2,300,000 of the shares of Common Stock that he
owns.
   
  Further, as of January 20, 1998, 1,950,000 shares were reserved for issuance
upon the exercise of a warrant issued to Jonathan Ledecky in connection with
the IPO (the "Ledecky Warrant") at an exercise price equal to     
 
                                      14
<PAGE>
 
   
$20.00 per share, 1,560,000 shares of Common Stock were reserved for issuance
upon the exercise of outstanding stock options, and an aggregate of 2,453,500
shares were reserved for issuance pursuant to the Incentive Plan, the
Directors' Plan and the Purchase Plan. Because the number of shares reserved
for issuance upon the exercise of awards made or to be made under the
Incentive Plan is 9% of the aggregate number of shares of Common Stock
outstanding from time to time, future issuances of Common Stock, whether in
acquisitions or otherwise, will result in an increase in the number of awards
available to be made. The Company has filed a registration statement on Form
S-8 with respect to the shares of Common Stock issuable upon exercise of all
of such options. The Registration Statement of which this Prospectus forms a
part registers 24,000,000 shares of Common Stock for issuance in acquisitions.
The Company has agreed that, at Jonathan Ledecky's request, it will file a
registration statement under the Securities Act for an offering of the shares
underlying the Ledecky Warrant during a ten-year period beginning on November
25, 1998, the first anniversary of the effective date of the registration
statement (the "Effective Date") filed with the Commission in connection with
the IPO. In addition, the Company has agreed to give Jonathan Ledecky the
right to request that the Company include the shares underlying his warrant on
a registration statement filed by the Company during a twelve-year period
beginning on the Effective Date.     
   
  Finally, as of January 20, 1998, 1,130,000 shares of Common Stock were
reserved for issuance upon exercise of the warrants issued to the
Representative (which will have the right, beginning one year after the
Effective Date, to require the Company to register such shares for sale under
the Securities Act) and 500,000 shares were reserved for issuance upon the
conversion of shares of Convertible Non-Voting Common Stock (which shares will
be eligible for resale beginning on November 25, 1998, the first anniversary
of the Effective Date). Sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect the prevailing
market price of the Common Stock and impair the Company's ability to raise
additional capital through the sale of equity securities. Each of the Company
and its executive officers and directors has generally agreed not to offer,
pledge, sell, contract to sell, or otherwise transfer or dispose of, directly
or indirectly, any shares of Common Stock or any securities convertible into
or exercisable or exchangeable for Common Stock during the period ending 180
days after the Effective Date without the prior written consent of the
Representative. See "Shares Eligible for Future Sale."     
 
  The Company expects to have an aggressive acquisition program under which it
will issue shares of Common Stock. Although some of the shares issued in
acquisitions may be subject to contractual restrictions on the transfer
thereof, shares issued in acquisitions accounted for under the pooling-of-
interests method of accounting cannot be issued subject to contractual
restrictions on transfer. Under the pooling-of-interests method of accounting,
the affiliates of acquired companies, which are expected to be, in most cases,
all of the stockholders of the companies acquired by the Company, must be free
to sell or otherwise transfer shares of Common Stock received in the
acquisition, subject to their compliance with the federal securities laws, as
soon as the Company releases results of operations that reflect the combined
post-acquisition operations of the Company and the acquired company for a
minimum of 30 days. If a significant number of shares of Common Stock are
issued in acquisitions that are completed in close proximity to each other,
such shares will become freely tradeable at the same time. If a large number
of shares are sold in the market by stockholders as soon as their shares
become freely transferable, the price of shares of Common Stock could be
adversely affected.
 
NO PRIOR MARKET FOR THE COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE
 
  Prior to the IPO, there was no public market for the Company's Common Stock.
An active public market for the Common Stock may not develop or be sustained.
The offering price for the Common Stock to be issued pursuant to this
Prospectus will be determined by negotiations between the Company and the
owners of the companies to be acquired. Any such negotiated price may bear no
relationship to the price at which the Common Stock will trade after each
respective acquisition and an active trading market may not be sustained
subsequent to any future acquisition transactions. The trading price of the
Common Stock could be subject to significant fluctuations in response to
activities of the Company's competitors, variations in quarterly operating
results, changes in market conditions and other events or factors. The market
price of the Company's Common Stock
 
                                      15
<PAGE>
 
   
after the offering could also be adversely affected by confusion or
uncertainty as to the pace of the Company's consolidation activities, the
ability of the Company to integrate effectively different sectors of the
facilities management industry and the difficulty for securities analysts and
investors to analyze the Company's financial and operational performance when
it operates in more than one sector of the facilities management industry.
Moreover, the volatility of the stock market could adversely affect the market
price of the Common Stock and the ability of the Company to raise equity in
the public markets.     
 
NO DIVIDENDS
 
  The Company has not paid any dividends on its Common Stock to date. The
payment of any dividends will be within the discretion of the Company's Board
of Directors. It is the present intention of the Board of Directors to retain
all earnings, if any, for use in the Company's business operations and,
accordingly, the Board of Directors does not anticipate declaring any
dividends in the foreseeable future. See "Dividend Policy."
 
DILUTION TO NEW INVESTORS
   
  If the Company issues additional Common Stock in the future, including
shares which may be issued pursuant to earn-out arrangements, option grants,
the Ledecky Warrant, the Representative's warrants and future acquisitions,
purchasers of Common Stock may experience dilution in the net tangible book
value per share of the Common Stock. Since the holders of Common Stock do not
have any preemptive right to purchase shares of Common Stock issued by the
Company in the future, their voting power will be diluted by future issuances
of shares of Common Stock by the Company.     
 
CERTAIN ANTITAKEOVER PROVISIONS
 
  The Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law, which prohibit the Company from engaging in
a "business combination" with an "interested stockholder" for a period of
three years after the date of the transaction in which the person became an
"interested stockholder," unless the business combination is approved in a
prescribed manner. See "Description of Capital Stock--Certain Provisions of
Delaware Law and the Company's Restated Certificate of Incorporation."
 
                                      16
<PAGE>
 
                          PRICE RANGE OF COMMON STOCK
   
  The Company's Common Stock has been quoted on the Nasdaq National Market
since November 26, 1997. On January 20, 1998, the closing price of the Common
Stock was $19.50 per share. As of January 20, 1998, there were 7 holders of
record of the Company's Common Stock. The Common Stock has traded at prices
ranging from $18.75 to $21.50 during the period from November 26, 1997 to
January 20, 1998.     
 
                                DIVIDEND POLICY
 
  The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future because it intends to retain its earnings, if
any, to finance the expansion of its business and for general corporate
purposes. Any payment of future dividends will be at the discretion of the
Board of Directors and will depend upon, among other factors, the Company's
earnings, financial condition, capital requirements, level of indebtedness,
contractual restrictions with respect to the payment of dividends and other
considerations that the Board of Directors deems relevant. Further, in the
event that the Company obtains a credit facility to be used for future
acquisitions or other capital requirements, it is likely that the terms of
such credit facility will prohibit or limit the payment of dividends by the
Company.
 
                                      17
<PAGE>
 
                  SELECTED PRO FORMA COMBINED FINANCIAL DATA
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
   
  The following table presents unaudited pro forma combined financial data for
the Company, adjusted to give effect to (i) the completion of the pending
acquisition of Service Management, (ii) certain pro forma adjustments to the
historical financial statements described below, and (iii) the completion of
the IPO and the concurrent offering of 500,000 shares of convertible non-
voting common stock (the "Concurrent Offering") during December 1997 and the
application of the net proceeds therefrom. The selected pro forma combined
financial data are not necessarily indicative of operating results or
financial position that would have been achieved had the events described
above been consummated and should not be construed as representative of future
operating results or financial position. The selected pro forma combined
financial data should be read in conjunction with the Unaudited Pro Forma
Combined Financial Statements and the notes thereto and the historical
financial statements of Service Management and the notes thereto included
elsewhere in this Prospectus.     
 
<TABLE>   
<CAPTION>
                                                 PRO FORMA COMBINED
                                        ---------------------------------------
                                           TWELVE       NINE MONTHS ENDED
                                        MONTHS ENDED      SEPTEMBER 30,
                                        DECEMBER 31, --------------------------
                                            1996        1996           1997
                                        ------------ -----------    -----------
<S>                                     <C>          <C>            <C>
Statement of Operations Data(1):
  Revenues.............................  $  12,074    $   7,749      $  18,810
  Cost of Revenues.....................      8,735        5,501         14,035
                                         ---------    ---------      ---------
  Gross profit.........................      3,339        2,248          4,775
  Selling, general and administrative..      1,992        1,317          2,810
  Goodwill amortization(3).............        211          158            158
                                         ---------    ---------      ---------
  Operating income.....................      1,136          773          1,807
  Interest and other (income) expense,
   net.................................        (60)         (52)            21
                                         ---------    ---------      ---------
  Income before income taxes(4)........      1,196          825          1,786
  Provision for income taxes...........        478          330            715
                                         ---------    ---------      ---------
  Net income...........................  $     718    $     495      $   1,071
                                         =========    =========      =========
  Net income per share.................  $    0.24    $    0.17      $    0.36
                                         =========    =========      =========
  Shares used in computing pro forma
   net income per share(5).............  2,946,057    2,946,057      2,946,057
                                         =========    =========      =========
<CAPTION>
                                              AS OF SEPTEMBER 30, 1997
                                        ---------------------------------------
                                                      PRO FORMA         AS
                                           ACTUAL    COMBINED(6)    ADJUSTED(7)
                                        ------------ -----------    -----------
<S>                                     <C>          <C>            <C>
Balance Sheet Data:
  Working capital......................  $      15    $  (8,644)(8)  $ 518,716
  Total assets.........................        339        5,737        532,781
  Long term debt, net of current
   maturities..........................        --            36             36
  Stockholder's equity.................         23        2,573        529,933
</TABLE>    
- --------
   
(1) The pro forma combined statement of operations data assume that the
    pending acquisition of Service Management, the IPO and the Concurrent
    Offering were completed on January 1, 1996.     
   
(2) The pro forma combined statement of operations data reflect an aggregate
    of approximately (i) $(177), $(53) and $159 for the year ended December
    31, 1996 and the nine-month periods ended September 30, 1996 and 1997,
    respectively, in pro forma reductions/increase in salaries, bonuses and
    benefits to the owner of Service Management, which have been agreed to
    prospectively (the "Compensation Differential").     
   
(3) Consists of amortization of the $8.8 million of goodwill to be recorded as
    a result of the combination of Service Management, over a 40 year period
    and computed on the basis described in the Notes to the Unaudited Pro
    Forma Combined Financial Statements.     
(4) Assumes all income is subject to a corporate income tax rate of 40% and
    the goodwill is tax deductible.
 
                                      18
<PAGE>
 
   
(5) Includes (i) 2,300,000 shares issued to the initial investor of the
    Company, (ii) 150,000 shares issued to the owner of Service Management and
    (iii) 496,057 shares of the 27,850,000 shares issued in the IPO during
    December 1997 used to pay the consideration of the pending acquisition of
    Service Management and to repay certain indebtedness of the Company.     
   
(6) The pro forma combined balance sheet data assume that the pending
    acquisition of Service Management, the IPO and the Concurrent Offering
    were consummated on September 30, 1997.     
   
(7) Adjusted for the sale of the 27,850,000 shares of Common Stock issued in
    the IPO in December 1997 and the application of the estimated net proceeds
    therefrom.     
   
(8) Reflects $9 million of cash consideration due to the owner of Service
    Managment.     
 
                                      19
<PAGE>
 
       
       
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
  The following discussion should be read in conjunction with the historical
balance sheet of the Company and related notes thereto appearing elsewhere in
this Prospectus.
   
OVERVIEW AND RESULTS OF OPERATIONS     
   
  Founded in February 1997, the Company intends to build a consolidated
enterprise with national market reach through the acquisition and integration
of multiple businesses in the facilities management industry. The Company has
generated no revenues since inception other than investment earnings on the
net proceeds of the IPO. As of September 30, 1997, the Company had incurred
expenses of $103,000 in connection with the analysis of industry consolidation
opportunities. The net proceeds from the IPO were approximately $527,000,000.
The proceeds will be utilized by the Company primarily in its acquisition
program although some are being used to fund operations of the Company. While
the Company expects to embark on an active acquisition program, until such
time as acquisitions are consummated, the Company's income will consist solely
of interest on the investment of the net proceeds of the IPO offset by
salaries and other operating costs of the Company.     
 
LIQUIDITY AND CAPITAL RESOURCES
   
  As of January 20, 1998, the Company had cash and cash equivalents of
approximately $527,000,000 representing the net proceeds of the IPO. In
addition, BT Alex. Brown Incorporated has provided the Company with a letter,
dated October 29, 1997, in which BT confirms that, upon the Company's request,
BT commits to use its best efforts to arrange and syndicate a $100 million
senior secured revolving bank credit facility to be used by the Company for
future acquisitions or other capital requirements. This bank credit facility
may, under certain conditions to be mutually agreed upon, be increased up to a
$500 million facility. The terms and conditions of any BT debt facility,
including the fee arrangements, are subject to mutual agreement. Use of any
such facility would likely be subject to conditions customary to facilities of
this type, including restrictions on other indebtedness, mergers,
acquisitions, dispositions and similar transactions. The Company may not
succeed in obtaining a facility of any size or in negotiating terms
satisfactory to the Company. Except for this proposed bank credit facility,
the Company currently has no plan or intention to obtain additional capital
through debt or equity financing in the next 12 months. If and when the
Company requires additional financing for its acquisition program or for other
capital requirements, the Company may be unable to obtain any such financing
on terms that the Company deems acceptable. The Company also expects to
utilize its Common Stock as a source of capital to provide a portion of the
consideration paid to acquire certain companies. The Company believes that the
net proceeds from the IPO, combined with the available authorized but unissued
and unreserved shares of Common Stock that may be issued in acquisitions, will
be sufficient to fund its operations and acquisition program through the end
of 1998.     
 
                                      20
<PAGE>
 
                                   BUSINESS
 
THE COMPANY
   
  Consolidation Capital Corporation was founded in February 1997 by Jonathan
J. Ledecky to build consolidated enterprises with national market reach
through the acquisition and integration of multiple businesses in one or more
fragmented industries that have no clear market leader and could benefit from
economies of scale. Recently, the Company determined to focus initially on the
facilities management industry, which it believes has the appropriate
consolidation characteristics since the facilities management industry
consists primarily of privately-held or family-owned businesses, whose owner-
operators desire liquidity and may be unable to access the capital markets
effectively or to expand beyond a local or regional base. The Company has
determined not to pursue consolidations in multiple, unrelated industries
based on its view that the facilities management industry is a large scale
industry offering significant opportunities to expand into and consolidate
many sectors that offer products and services intended to enhance the
operating efficiency of retail, commercial and industrial clients.     
   
  Jonathan Ledecky is the Chairman and founder and, until November 5, 1997,
was the Chief Executive Officer, of USOP. While managing USOP, Jonathan
Ledecky developed a strategy of "corporate democracy," which he believes
facilitated USOP's rapid consolidation of more than 205 companies within seven
different industry groups in the office products and services industry. The
corporate democracy approach includes (i) a general policy of empowering local
management and (ii) drawing upon the contacts and expertise of local
management by encouraging them to identify acquisition candidates and to
participate in the process of integrating newly acquired companies into a
consolidated enterprise. The Company intends to employ a corporate democracy
approach as one of its principal operating strategies.     
   
  From 1994 until November 1997, Jonathan Ledecky served as Chief Executive
Officer of USOP and, in that capacity, was responsible for in excess of $1.7
billion in acquisitions of domestic and international businesses. The Company
will seek to leverage the experience and expertise of Jonathan Ledecky, its
founder, Chairman and Chief Executive Officer, and the Company's management
team to become a leading consolidator of the facilities management industry.
The Company believes that, through the prior experience of Jonathan Ledecky
and the Company's management team, it has an extensive referral network of
investment and commercial bankers, business leaders, attorneys, accountants
and business and financial brokers, which will further its ability to
identify, attract and acquire desirable acquisition candidates.     
   
  The Company believes that it will possess substantial competitive
advantages. The Company expects to benefit from its ability to deploy rapidly
its significant financial resources and to use its publicly traded stock as
currency in selected acquisitions. Because the Company has significant cash
and cash equivalents as of January 20, 1998, the Company's ability to acquire
attractive companies is not likely to be constrained initially by the need to
access the capital markets. Furthermore, the Company believes that its
corporate democracy principles will help it attract and acquire companies and
will differentiate it from traditional consolidators. The Company believes
that its corporate democracy approach generates significant competitive
advantages because this approach allows managers of the acquired companies to
benefit from the economies of a large organization while simultaneously
retaining local operational control, enabling them to provide flexible and
responsive service to customers. Such an approach could, however, limit
possible consolidation efficiencies and integration efforts. In addition,
although the Company's management team has experience in acquiring and
consolidating businesses, it does not have experience managing companies in
the facilities management industry. The Company, therefore, expects to rely in
part upon management of acquired companies or other individuals experienced in
the facilities management industry.     
   
  On January 8, 1998, the Company entered into a letter of intent to acquire
Service Management. Service Management is a Sterling, Virginia-based provider
of facilities management services specializing in providing janitorial
maintenance management services to retailers and industrial and commercial
clients in 39 states. See "--Pending Acquisition." Facilities management
companies generally provide many products and services needed for the routine
operation and maintenance of a building.     
 
 
                                      21
<PAGE>
 
INDUSTRY BACKGROUND
          
  Facilities management companies generally provide many products and services
needed for the routine operation and maintenance of a building. These products
and services include, among others, janitorial maintenance management
services, electrical contracting and maintenance, lighting equipment and
services, engineering services, parking facility management, security systems
and services, fire protection equipment and services, grounds keeping and
landscaping services, pest control and general equipment maintenance.     
   
  The Company believes that, over the last several years, there has been a
significant trend towards the outsourcing of business support services.
According to the Outsourcing Institute, approximately 80% of U.S. companies
outsource some aspect of their business support services, and spending on
outsourcing services increased approximately 100% from 1992 through 1996. The
Company further believes that this trend will continue. The Outsourcing
Institute estimates that the demand for outsourcing services in the facilities
management industry will grow at a compound annual growth rate of
approximately 20% through the year 2000.     
   
  The Company believes that the trend toward outsourcing has transformed the
traditional facilities management industry. As companies began to realize the
benefits of outsourcing non-core business functions to single source vendors,
the opportunities for facilities management companies to expand into new
business sectors and obtain new customers have increased. Facilities
management companies have expanded their businesses from providing traditional
cleaning services for commercial property managers and large corporations to
performing higher value added services for companies in the retail, commercial
and industrial sectors. Outsourcing allows companies to, among other things,
focus on their core competencies, reduce operating expenses, share risk
management responsibility and access technical expertise not available
internally.     
   
  These favorable trends are expected to continue. With the Company's
significant financial resources combined with its aggressive consolidation
strategy, the Company believes that it is well positioned to capitalize on the
trends toward outsourcing.     
       
       
STRATEGY
   
  The Company's goal is to become the leading consolidator in the facilities
management industry. The Company intends to acquire established local or
regional businesses and combine and integrate them into an effective national
organization. The Company believes that its strong financial position, the
operating and acquisition expertise of its management team and its ability to
address the needs of local management will allow it to achieve its goal of
being the "consolidator of choice" of acquisition candidates.     
 
  In order to achieve its goal, the Company will focus on: (1) identifying
acquisition candidates which meet the Company's consolidation criteria; (2)
attracting and acquiring companies through implementation of the Company's
corporate democracy approach, which the Company believes will differentiate it
from other consolidators; and (3) achieving operating efficiencies and
synergies by combining administrative functions, eliminating redundant
facilities, implementing system and technology improvements and purchasing
products and services in large volumes.
   
  Identify and Pursue Strategic Consolidation Opportunity. The Company intends
to capitalize upon the consolidation opportunity in the facilities management
industry by acquiring companies having some or all of the following
characteristics: (i) stable cash flows and recurring revenue streams from
long-term customer relationships; (ii) low product obsolescence and non-
reliance on innovation or technology to drive recurring revenue streams; (iii)
long-term growth prospects for products and services offered; (iv) a strong
"franchise" or presence in the communities served by the acquisition
candidate; (v) an experienced management team comprised of recognized industry
leaders; (vi) an ability to retain, promote and motivate management teams;
(vii) favorable demographic trends within the local regions serviced; and
(viii) an underpenetrated market for products or services provided by the
acquisition candidate.     
 
                                      22
<PAGE>
 
   
  In general, the Company plans to acquire larger, established high quality
companies, or "hubs," in high density, metropolitan areas, and additional
smaller companies, or "spokes," in secondary markets surrounding the hubs.
Where possible, the operations of the spokes will be integrated into the
operations of existing hubs, thereby enabling the Company to achieve the
economies of scale necessary to decrease operating cost and increase operating
margin.     
          
  The Company believes that, based on the experience of Jonathan Ledecky and
the Company's management team, it is well positioned to identify acquisition
candidates within the facilities management industry to create a consolidated
enterprise. The Company believes that another competitive advantage will be
the Company's ability to deploy rapidly its significant financial resources
and/or to use its publicly traded stock as consideration in selected
acquisitions.     
          
  Differentiate Through Corporate Democracy. The Company believes that its
implementation of corporate democracy will give the Company a competitive
advantage over rival consolidators in attracting, buying and integrating
acquired companies. The Company's business model entails both a decentralized
management philosophy and a centralized operating approach. Each of the
acquired companies will continue to manage all functions that "touch the
customer," including sales, marketing, customer service, credit and
collections. The Company will manage functions such as purchasing, accounting,
inventory management, human resources and finance centrally where it can
leverage its size and scale. Principles of corporate democracy that will be
used by the Company include:     
 
  . Control by Owner/Operator. The corporate democracy approach to
    consolidation is designed to allow the owners and operators who have
    built an acquired company to retain operational control of the business
    while the Company centralizes certain administrative functions to provide
    benefits from operating efficiencies and synergies resulting from the
    consolidation of the acquired company into a larger enterprise. This is
    in contrast to the traditional consolidation approach used by other
    consolidators in which the owner/operators and their employees are often
    relieved of management responsibility as a result of a complete
    centralization of management in the consolidated enterprise.
 
  . ""Think National, Act Local" Management. The Company plans to provide
    strategic oversight and guidance with respect to acquisitions, financing,
    marketing and operations. At the same time, managers of acquired
    companies will be responsible for the day-to-day operations of each of
    the acquired companies. As part of its "Think National, Act Local"
    management strategy, the Company intends to foster a culture of
    cooperation and teamwork that emphasizes dissemination of "best
    practices" among its local or acquired management teams. The Company
    believes that this decentralized management philosophy results in better
    customer service by allowing local management the flexibility to
    implement policies and make decisions based upon the needs and desires of
    local customers and the context of local market conditions. The
    decentralized sales and customer contact also facilitates the retention
    of historical customers of the acquired companies.
 
  . Local Business Identity, Management and Sales Organization. The corporate
    democracy approach to consolidation permits the Company to capitalize on
    the strength of the owner/operator's connection to his locality, region
    or community by maintaining the original name of the acquired company in
    the given geographic location. This contrasts with other consolidation
    approaches which often eliminate the local name of the acquired company
    and replace it with a single or "national" business name. The Company
    believes that many customers purchase products and services based upon
    long-term commercial relationships. The Company believes that corporate
    democracy best preserves the business-customer relationships by, in most
    circumstances, retaining the management, sales organizations, and brand
    name identity of acquired companies and minimizing operational changes
    that adversely affect the customer.
 
  . Use of Stock as Currency and Incentive Compensation. The Company intends
    to structure many of its acquisitions using the Company's stock as
    currency. This use of stock as acquisition currency, coupled with the
    retention of experienced owner/operators and established sales
    organizations, creates a high percentage of employee ownership and strong
    incentives for good performance. The Company believes that this stock
    ownership plan, in conjunction with the implementation of incentive
    compensation
 
                                      23
<PAGE>
 
   programs geared to specific performance goals, will help to align the
   objectives of the acquired companies' managers and employees with those of
   the Company's stockholders.
   
  Provide Integrated Facilities Solutions. The Company believes that an
attractive opportunity exists in the facilities management industry to become
the premier sole source provider of a full range of facilities management
services. These services are intended to enhance the operating efficiency of
customers' facilities while relieving the Company's customers from the
management and personnel burdens associated with non-core functions. Many
companies have increased the volume and types of services they outsource in
order to focus on their respective core competencies.     
     
  . Expanding Service Lines Through Acquisitions. Through acquisitions of
    related facilities management services companies, the Company expects to
    expand the range of products and services that it offers, thereby
    creating opportunities, where possible, for its sales force to sell
    multiple product and service lines to its customer base. Cross-selling
    new services to existing customers represents a cost-effective method for
    the Company to achieve revenue growth. As part of this strategy, the
    Company intends to focus its efforts on increasing the proportion of its
    business devoted to delivering higher value added services to its
    customers.     
     
  . Expanding Service Lines Through Strategic Partnering. In order to supply
    seamless integrated services to a broad base of customers and facilities,
    the Company intends to select, manage and integrate services provided by
    third parties into the Company's overall portfolio of services.     
       
       
  Achieve Operating Efficiencies. The Company believes that it will be able to
achieve certain operating efficiencies and synergies among its acquired
companies. Such operating efficiencies include:
 
  . Combining Administrative Functions. The Company will seek to institute a
    Company-wide management information system and to combine at the
    corporate level certain administrative functions, such as financial
    reporting and finance, insurance, employee benefits and legal support.
     
  . Using Hub and Spoke System to Eliminate Redundant Facilities and
    Service. The hub and spoke strategy involves the acquisition of a larger,
    established, high-quality company in a targeted geographic area into
    which the facilities and operations of local, smaller acquired companies,
    or "spokes", are folded, allowing the elimination of redundant facilities
    and reducing overhead. This hub and spoke strategy also enables the
    integration of certain operational activities, such as inventory
    management, purchasing, shipping, accounting and human resources, among
    acquired companies located in a geographic area, thereby permitting the
    elimination of duplicative facilities and costs.     
     
  . Implementing System and Technology Improvements. The Company believes it
    will be able to increase the operating margin of combined acquired
    companies by using operating and technology systems to improve and
    enhance the operations of the combined acquired companies, which may
    include computerized inventory management and order processing systems,
    computerized quotation and job costing systems and computerized logistics
    and distribution systems. The Company believes that many of the acquired
    companies have not made material investments in such operating and
    technology systems because they lack the necessary scale to justify the
    investment. The Company believes that the implementation of such systems
    may significantly increase the speed and accuracy of order processing and
    fulfillment at acquired companies, while providing measurement and
    analysis tools that facilitate efficient operation.     
     
  . Using Volume Purchasing. The Company believes that it may achieve
    operating efficiencies through volume purchasing and may benefit from
    favorable prices and rebates accruing as the result of high volume
    purchases. The Company may also negotiate improved arrangements with
    wholesalers and manufacturers to reduce inventory levels of certain
    acquired companies, thereby allowing more efficient operations by
    decreasing inventory holding costs and increasing operating margins. The
    Company may also seek to leverage its size and scale to negotiate
    attractive volume purchasing or leasing programs for goods and services
    such as delivery vehicles, long distance voice and data services,
    overnight delivery services, real estate services, banking and financial
    services, and insurance.     
 
                                       24
<PAGE>
 
     
  . Implementing Strategic Marketing and Cross-Functional Selling. The
    Company believes that it may achieve certain efficiencies through
    strategic marketing plans to be shared by acquired companies as well as
    cross-functional selling to customers of each of the acquired companies.
    These synergies of strategic marketing and cross-functional selling may
    allow additional services to be provided or goods to be sold to existing
    customers of the acquired companies, resulting in additional revenues for
    the Company. These synergies may also provide a broader geographic sales
    and service reach for each of the acquired companies, increasing the
    customer base of the acquired companies.     
   
PENDING ACQUISITION     
   
  On January 8, 1998, the Company entered into a letter of intent to acquire
Service Management, a Sterling, Virginia-based provider of facilities
management services. Service Management was founded in 1982 and has become a
leading facilities management company specializing in providing janitorial
maintenance management services to retailers and industrial and commercial
clients in 39 states. Some of Service Management's major clients include the
United Parcel Service, K-Mart, Wal-Mart, Target, Sports Authority, CVS,
Kroger, Shaw's and Bi-lo grocery stores. Service Management had revenues for
the nine months ended September 30, 1997 of approximately $18.8 million.
Service Management provides a broad array of basic janitorial services for a
variety of retail, commercial and industrial clients. Janitorial services
include floor cleaning and finishing, wall and window washing, pressure
washing, furniture polishing, carpet cleaning, dusting, and other building
cleaning services.     
   
  The letter of intent with Service Management provides for consideration of
$9 million in cash and $3 million payable in shares of Common Stock valued at
the closing price of the Common Stock on the date the letter of intent was
signed. In addition, there is the potential for the payments of up to an
additional $13 million, consisting of 50% in cash and 50% in shares of Common
Stock, based upon a combination of the earnings before interest and taxes of
Service Management during the 12 months subsequent to the Company's completion
of the acquisition of Service Management, and the revenues of Service
Management, including the revenues of certain companies identified by Service
Management that may be acquired by the Company in the future, during the 24
months subsequent to the completion of the acquisition of Service Management.
No assurance can be given that the acquisition of Service Management will be
completed or that it will be completed on the terms described above.     
   
  The Company is in discussions with additional acquisition candidates and may
from time to time enter into letters of intent or agreements in principle with
respect to the acquisition of such businesses. No assurance can be given,
however, that the Company will complete additional acquisitions.     
 
CONFLICTS OF INTEREST
          
  Jonathan Ledecky serves as both the Chairman and Chief Executive Officer of
the Company and the Chairman and an executive officer of USOP. On January 13,
1998, Jonathan Ledecky entered into a Services Agreement with USOP, effective
upon the completion of USOP's announced restructuring which involves a self-
tender and the incurrence of indebtedness related thereto, the spin-off of
four of USOP's divisions and an equity investment. If the restructuring is
completed, Jonathan Ledecky will resign as the Chairman and as an executive
officer of USOP, but will continue to provide mutually agreed advisory
services to USOP and the companies that are being spun off from USOP and the
Services Agreement will supersede Jonathan Ledecky's USOP Employment
Agreement. If USOP's announced restructuring is not completed, the USOP
Employment Agreement will remain in effect. USOP has announced that the
proposed restructuring is not expected to be completed until the second
calendar quarter of 1998.     
   
  As long as Jonathan Ledecky serves as a director and an executive officer of
both the Company and USOP, Jonathan Ledecky owes a duty of loyalty and a duty
of care under Delaware law to both companies. These duties obligate him to
present certain business opportunities to the company to which he owes the
duties before pursuing such opportunities himself. There is no agreement among
Jonathan Ledecky, the Company and/or USOP delineating Jonathan Ledecky's
duties to each company or resolving potential conflicts between his
conflicting duties and obligations, although USOP has approved the Company's
entry into the facilities management industry.     
 
                                      25
<PAGE>
 
   
  In addition, Jonathan Ledecky has entered into the USOP Employment
Agreement, which will remain in effect until USOP's proposed restructuring is
completed and is replaced by the Services Agreement, and the CCC Employment
Agreement. Under the USOP Employment Agreement, Jonathan Ledecky is obligated
to assist in, among other things, identifying and pursuing new business and
investment opportunities and acquisitions for USOP, developing and providing
strategic plans and growth analyses for USOP, providing structuring,
capitalization, restructuring, recapitalization and reorganization advice to
USOP and assisting in implementing such advice, and interfacing with the
investment and financial community on an as-needed basis. While Jonathan
Ledecky is not responsible for the day-to-day oversight of USOP, his positions
as an executive officer and Chairman of the Board of USOP may nonetheless
result in competition between USOP matters and Company matters for his time
and professional attention, and may result in or exacerbate conflicts as to
his obligations to present business opportunities to one company or another,
or to pursue such opportunities for one company or another. The USOP
Employment Agreement and the Services Agreement also contain restrictions on
Jonathan Ledecky's ability to recruit or employ current and certain former
employees of USOP. This restriction could present a possible conflict between
Jonathan Ledecky's actions and recommendations to retain employees and his
efforts to employ suitable individuals with the Company. In addition, the USOP
Employment Agreement and the Services Agreement recite that in the course of
Jonathan Ledecky's employment with USOP he has become familiar with and aware
of certain information regarding USOP's operations that the agreements
describes as a trade secret of USOP. Were Jonathan Ledecky to be held
wrongfully to have disclosed any trade secret information to the Company or
others in violation of his obligations to USOP, he could face liability for
such disclosure, and the Company could face liability for inducing or aiding
in any such alleged violation. Finally, under the USOP Employment Agreement
and the Services Agreement, Jonathan Ledecky is not prohibited from serving as
an officer, director or employee of or consultant to the Company, provided
that such actions do not otherwise breach his obligations under the USOP
Employment Agreement or the Services Agreement, as applicable.     
   
  For as long as the USOP Employment Agreement is in effect, Jonathan Ledecky
owes duties of loyalty and care and has contractual obligations to both the
Company and USOP simultaneously. If and when the Services Agreement supersedes
the USOP Employment Agreement, Jonathan Ledecky will have contractual
obligations to the Company, USOP and the companies that are being spun off
from USOP, and he may be unable in certain circumstances to fulfill his duties
of loyalty and care and his contractual obligations to one company without
allegedly breaching them to the other. Any alleged breach could result in
litigation by or on behalf of the offended company under any of a number of
possible legal theories, including seeking damages from Jonathan Ledecky for
the purported breach or from the other such company for tortiously interfering
with the offended company's contractual relationship with Jonathan Ledecky or
for inducing him to breach his duties to the offended company. The conduct or
response to any such litigation could consume significant management attention
and resources, and the defense, settlement or final adjudication of any such
litigation could have a material adverse effect on the Company's business,
financial condition and/or results of operations.     
       
  In addition, Jonathan Ledecky is the Non-Executive Chairman of the Board of
USA Floral, the Non-Executive Chairman of the Board of US Leasing, and a
prospective minority investor in Unison Partners. Each of USA Floral, US
Leasing and Unison Partners is, or is seeking to become, a consolidator of
businesses in one or more industries. Jonathan Ledecky may thus have conflicts
of interest in determining to which of these entities, if any, a particular
relevant business opportunity should be presented.
 
COMPETITION
          
  The facilities management industry is highly competitive. It is
characterized by both large national and multi-national organizations
providing a wide variety of facilities management services to their customers
and numerous smaller companies providing fewer services in limited geographic
areas. In addition, property management companies are beginning to enter the
facilities management business. Barriers to entry to the markets for certain
facilities management services, such as janitorial and custodial services, are
low, and the     
 
                                      26
<PAGE>
 
   
Company expects to compete against numerous smaller service providers, many of
which may have more experience in and knowledge of the local market for such
services. Such smaller service providers may also have lower overhead cost
structures and may be able to provide their services at lower rates than the
Company. In these same markets, the Company also expects to face large
competitors offering multiple services and that are willing to accept lower
profit margins in order to capture market share. As a result of this
competition, the Company may lose customers or have difficulty acquiring new
customers. As a result of competitive pressures on the pricing of facilities
management services, the Company's revenues or margins may decline.     
   
  The Company also expects to face significant competition to acquire
facilities management businesses from larger companies that currently pursue,
or are expected to pursue, acquisitions as part of their growth strategies and
as the industry undergoes continuing consolidation. Such competition could
lead to higher prices being paid for acquired companies.     
          
POTENTIAL ENVIRONMENTAL LIABILITY     
   
  The nature of the facilities management industry necessarily involves the
transport, storage, use and disposal of cleaning solvents, lubricants,
chemicals and other hazardous materials by employees to, on and around the
customers' facilities or, in certain cases, facilities leased by the Company
on behalf of its customers. Such activities are subject to stringent and
changing federal, state and local regulation and present the potential for
liability of the Company for the actions of its employees in handling such
materials. In addition, the exposure of the Company's employees to these
materials may give rise to claims by employees against the Company. As a
result, there can be no assurance that compliance with governmental
regulations or liability related to hazardous materials will not have a
material adverse effect on the Company's financial condition or results of
operations.     
       
FACILITIES AND EMPLOYEES
   
  The Company's corporate offices are located in leased space at 1747
Pennsylvania Avenue, N.W., Suite 900, Washington, D.C. 20006. The telephone
number of its principal executive offices is 202/955-5490. To accommodate its
planned growth, the Company intends to seek a larger headquarters facility in
the Washington area, which it intends to lease. As of January 20, 1998, the
Company employed four executive officers and expects to employ a limited
number of other personnel in the near future.     
 
LEGAL PROCEEDINGS
 
  The Company is not a party to any legal proceedings.
 
                                      27
<PAGE>
 
                                  MANAGEMENT
 
EXECUTIVE OFFICERS AND DIRECTORS
   
  The following table sets forth certain information concerning each of the
executive officers and directors of the Company as of January 20, 1998:     
 
<TABLE>
<CAPTION>
      NAME                 AGE POSITION WITH THE COMPANY
      ----                 --- -------------------------
      <S>                  <C> <C>
      Jonathan J. Ledecky   39 Chairman and Chief Executive Officer
      Timothy C. Clayton    43 Executive Vice President, Chief Financial
                                Officer and Treasurer
      F. Traynor Beck       42 Executive Vice President, General Counsel
                                and Secretary
      David Ledecky         36 Executive Vice President and Chief
                                Administrative Officer; Director
      Vincent W. Eades      38 Director
      W. Russell Ramsey     37 Director
      M. Jude Reyes         42 Director
</TABLE>
 
  Jonathan J. Ledecky founded the Company in February 1997 and serves as its
Chairman and Chief Executive Officer. Jonathan Ledecky founded U.S. Office
Products Company, a company engaged in providing office and educational
products and business services, in October 1994 and has served as its Chairman
of the Board and, until November 5, 1997, its Chief Executive Officer. Since
its inception, USOP has acquired over 205 companies. Jonathan Ledecky has also
served as the Non-Executive Chairman of the Board of USA Floral since April
1997 and as the Non-Executive Chairman of the Board of US Leasing since
October 1997. Prior to founding USOP, Jonathan Ledecky served from 1989 to
1991 as the President of The Legacy Fund, Inc., and from 1991 to September
1994 as President and Chief Executive Officer of Legacy Dealer Capital Fund,
Inc., a wholly owned subsidiary of Steelcase Inc. ("Steelcase"), the nation's
largest manufacturer of office furniture products. While at Legacy Dealer
Capital Fund, Inc., Jonathan Ledecky was responsible for providing corporate
advisory services for Steelcase's network of office products distributors. In
addition, Jonathan Ledecky has served as a director of, or corporate adviser
and consultant to, several office products companies. Prior to his tenure at
The Legacy Fund, Inc., Jonathan Ledecky was a partner at Adler and Company and
a Senior Vice President at publicly-traded Allied Capital Corporation, an
investment management company. Jonathan Ledecky serves as a director of
publicly-traded MLC Holdings, Inc. Jonathan Ledecky is a graduate of Harvard
College and Harvard Business School. Jonathan Ledecky is the brother of David
Ledecky.
 
  Timothy C. Clayton has served as Executive Vice President, Chief Financial
Officer and Treasurer of the Company since November 25, 1997. Between August
1976 and October 1997, Mr. Clayton was associated with Price Waterhouse LLP,
most recently as a Partner since July 1988. In his capacity as Partner, Mr.
Clayton focused his practice on, among others, distribution, technology,
financial services, business services and manufacturing industries, and was
responsible for providing audit and business advisory services to clients
active in consolidating a variety of industries. Mr. Clayton is a graduate of
Michigan State University.
 
  F. Traynor Beck has served as Executive Vice President, General Counsel and
Secretary of the Company since November 25, 1997. Between January 1988 and
November 25, 1997, Mr. Beck was associated with Morgan, Lewis and Bockius LLP,
most recently as a partner since October 1994. Mr. Beck's practice was focused
on mergers, acquisitions and general corporate matters, including
consolidation transactions. Mr. Beck is a graduate of the University of
Pennsylvania, Oxford University and Stanford Law School.
 
  David Ledecky joined the Company as Senior Vice President, Secretary and
Treasurer in September 1997 and was appointed Executive Vice President and
Chief Administrative Officer on November 25, 1997. David Ledecky has also
served as a director since November 25, 1997. Prior thereto, he operated
Ledecky Brothers L.L.C., the Company's predecessor, as its Vice President and
sole employee since its inception in February 1997.
 
                                      28
<PAGE>
 
In that capacity, he researched and analyzed industry consolidation and
acquisition opportunities. From 1992 to 1996, David Ledecky was an attorney at
the Washington, D.C. law firm of Comey, Boyd & Luskin. Prior to 1992, he was
an attorney with the law firm of Shearman & Sterling, and a Vice President of
The Legacy Fund, Inc. in Washington, D.C. He is a former consultant to the
computer and telecommunications industries. He is a graduate of Harvard
College and Yale Law School. David Ledecky is the brother of Jonathan Ledecky.
 
  Vincent W. Eades has been a director of the Company since November 25, 1997.
Mr. Eades has served as the Senior Vice President of Sales and Marketing for
Starbucks Coffee Co. Inc. since May 1995. Mr. Eades was employed by Hallmark
Cards Inc., most recently as a General Manager from November 1985 through
April 1995. Additionally, he serves as a director of USA Floral.
 
  W. Russell Ramsey has been a director of the Company since November 25,
1997. Mr. Ramsey is President, co-founder and a director of Friedman,
Billings, Ramsey Group, Inc. ("FBR Group"), a holding company engaged in
brokerage, investment banking, corporate finance and asset management
activities in the Washington, D.C. area. He has continuously served as
President of FBR Group and its predecessors since co-founding FBR Group in
1989. FBR, the Representative in the IPO, is a wholly owned indirect
subsidiary of FBR Group. FBR was ranked fourth in terms of lead managed U.S.
IPO dollar volume for 1997 year to date as of October 17, 1997, according to
CommScan EquiDesk. FBR has 230 full-time employees and operates offices in the
Washington, D.C. area, Boston, London, and Irvine. During 1989, Mr. Ramsey
served as a Vice President at Johnston, Lemon & Co., Inc., a Washington, D.C.
brokerage firm. Mr. Ramsey holds a B.A. from The George Washington University.
Mr. Ramsey is a director designee of FBR pursuant to an agreement between the
Company and FBR.
 
  M. Jude Reyes has been a director of the Company since November 25, 1997.
Mr. Reyes has served as Chairman and President of Premium Distributors of
Virginia, L.L.C., a beverage distributor, since 1992. Between 1989 and 1992,
Mr. Reyes served as President and Chairman of Harbor Distributing Company in
Los Angeles, California. He also is a director and investor in three other
beverage distributors and two wholesale food service distributors. Mr. Reyes
is a director designee of FBR pursuant to an agreement between the Company and
FBR.
 
COMMITTEES OF THE BOARD OF DIRECTORS
 
  The Company's Board of Directors has established an Audit Committee and a
Compensation Committee.
 
  The responsibilities of the Audit Committee include recommending to the
Board of Directors the independent public accountants to be selected to
conduct the annual audit of the books and records of the Company, reviewing
the proposed scope of such audit and approving the audit fees to be paid,
reviewing accounting and financial controls of the Company with the
independent public accountants and the Company's financial and accounting
staff and reviewing and approving transactions between the Company and its
directors, officers and affiliates. Messrs. Eades, Ramsey and Reyes are the
members of the Audit Committee.
 
  The Compensation Committee provides a general review of the Company's
compensation plans to ensure that they meet corporate objectives. The
responsibilities of the Compensation Committee also include administering the
Incentive Plan and Bonus Plan, including selecting the officers and salaried
employees to whom awards will be granted. Messrs. Eades and Reyes, independent
directors of the Company, are the members of the Compensation Committee.
 
DIRECTOR COMPENSATION
 
  Directors who are not receiving compensation as officers, employees or
consultants of the Company are entitled to receive an annual retainer fee of
$25,000. In addition, pursuant to the Consolidation Capital Corporation 1997
Non-Employee Directors' Stock Plan, each non-employee director receives an
automatic initial grant of options to purchase 20,000 shares of Common Stock
on the date of their initial election to the Board of Directors, and an
automatic annual grant of options to purchase 5,000 shares. Each such option
will have an exercise price equal to the fair market value of a share of
Common Stock on the date of grant. See "--1997 Non-Employee Directors' Stock
Plan."
 
                                      29
<PAGE>
 
                             
                          EXECUTIVE COMPENSATION     
   
SUMMARY COMPENSATION TABLE     
   
  The following table provides for fiscal 1997 certain summary information
concerning the cash and non-cash compensation earned by or awarded to (i) the
Company's Chief Executive Officer and (ii) each of the Company's other
executive officers (collectively, the "named executive officers"). The Company
was organized in February 1997, with David Ledecky as its sole employee. All
other named executive officers were employed by the Company as of November 25,
1997.     
                           
                        SUMMARY COMPENSATION TABLE     
 
<TABLE>   
<CAPTION>
                                                                   LONG-TERM COMPENSATION
                                                                -----------------------------
                                     ANNUAL COMPENSATION               AWARDS         PAYOUTS
                                 ------------------------------ --------------------- -------
                                                                           SECURITIES
                                                                             UNDER-
                                                      OTHER     RESTRICTED   LYING
                                                      ANNUAL      STOCK     OPTIONS/   LTIP
   NAME AND PRINCIPAL     FISCAL  SALARY     BONUS COMPENSATION  AWARD(S)     SARS    PAYOUTS  ALL OTHER
        POSITION           YEAR   ($)(1)      ($)      ($)         ($)       (#)(2)     ($)   COMPENSATION
   ------------------     ------ --------    ----- ------------ ---------- ---------- ------- ------------
<S>                       <C>    <C>         <C>   <C>          <C>        <C>        <C>     <C>
Jonathan J. Ledecky,
 Chief Executive Officer
 and Chariman of the
 Board..................   1997  $125,000     --       --          --           --      --          --
Timothy C. Clayton,
 Executive Vice
 President, Chief
 Financial Officer and
 Treasurer..............   1997  $223,000     --       --          --       500,000     --       25,000(3)
F. Traynor Beck,
 Executive Vice
 President, General
 Counsel and Secretary..   1997  $223,000     --       --          --       500,000     --          --
David Ledecky,
 Executive Vice
 President and Chief
 Administrative Officer,
 Director...............   1997  $327,994(4)  --       --          --       500,000     --          --
</TABLE>    
- --------
   
(1) Includes guaranteed bonus payments of $200,000 for Mr. Clayton, Mr. Beck
    and David Ledecky, which were declared in December 1997 and paid in
    January 1998.     
   
(2) Represents options granted in 1997 with respect to the Company's Common
    Stock, each option to vest ratably on November 25, 1998, 1999, 2000 and
    2001, unless accelerated under certain conditions.     
   
(3) Represents amount paid to Mr. Clayton for consulting services during
    November 1997.     
   
(4) Represents payments made to David Ledecky by Ledecky Brothers LLC,
    predecessor to the Company, and by the Company.     
 
  Employment Agreements. The Company has entered into an employment agreement
with Jonathan Ledecky. The agreement has a one-year term and is automatically
renewable for one-year terms thereafter unless either party gives notice of
non-renewal at least 90 days prior to the end of the term. Pursuant to the
terms of the agreement, Jonathan Ledecky is obligated to devote the
substantial majority of his business time, attention and efforts to his duties
thereunder, except when necessary to fulfill his fiduciary obligations to USOP
and the provisions of his employment agreement with USOP, as well as his
fiduciary obligations to USA Floral, US Leasing and Unison Partners, a private
company of which he intends to be a minority investor. The agreement provides
for an annual salary of $750,000 and a discretionary bonus in an amount up to
100% of the employee's base salary. If the agreement is terminated by the
Company other than for Cause (as defined), Jonathan Ledecky is entitled to
receive an amount equal to twice his base salary and one times the bonus he
received in the prior
 
                                      30
<PAGE>
 
year. The agreement prohibits Jonathan Ledecky from competing with the Company
during the term of his employment and for a period of one year thereafter. The
agreement also provides for certain specified executive perquisites.
 
  The Company has entered into employment agreements with each of F. Traynor
Beck, Timothy Clayton and David Ledecky, the terms of which are substantially
identical. Each of the agreements has a two-year term and is automatically
renewable for one-year terms thereafter, unless either party gives notice of
non-renewal at least six months prior to the end of the term. Pursuant to the
terms of the agreements, each of F. Traynor Beck, Timothy Clayton and David
Ledecky is obligated to devote his full business time, attention and efforts
to his duties thereunder. Each of the agreements provides for an annual salary
of $300,000, a guaranteed bonus of $200,000 for the first year of the term and
a discretionary bonus in an amount of up to 100% of the employee's base salary
each year thereafter. On the Effective Date, each of these executive officers
received a grant of an option to purchase 500,000 shares of Common Stock at an
exercise price equal to the initial public offering price per share ($20.00),
which option will vest ratably on the first, second, third and fourth
anniversaries of the date of grant, unless accelerated under certain
conditions. If the agreement is terminated by the Company other than for Cause
(as defined), the executive officer will be entitled to receive amounts equal
to twice his base salary and one times the bonus he received in the prior
year. The agreements prohibit the executive officer from competing with the
Company during the term of his employment and for a period of one year
thereafter. The agreements also provide for certain specified executive
benefits and perquisites, including, in the case of Timothy Clayton, the
purchase of an annuity contract to be placed in a deferred compensation plan
that will provide him with an annual payout of $100,000 for each year of his
life between age 55 and age 75.
   
OPTION GRANTS IN FISCAL 1997     
   
  The following table sets forth certain information concerning the grant of
options to purchase Common Stock of the Company during Fiscal 1997 to each of
the named executive officers.     
                     
                  OPTIONS/SAR GRANTS IN LAST FISCAL YEAR     
<TABLE>   
<CAPTION>
                                                                      POTENTIAL REALIZABLE VALUE
                                                                      AT ASSUMED ANNUAL RATES OF
                                                                       STOCK PRICE APPRECIATION
                          INDIVIDUAL GRANTS                               FOR OPTION TERM(2)
- --------------------------------------------------------------------- --------------------------
                         NUMBER OF   PERCENT OF
                         SECURITIES TOTAL OPTIONS
                         UNDERLYING  GRANTED TO
                          OPTIONS   EMPLOYEES IN  EXERCISE EXPIRATION
          NAME           GRANTED(1)  FISCAL YEAR   PRICE      DATE    0%      5%         10%
          ----           ---------- ------------- -------- ---------- --- ---------- -----------
<S>                      <C>        <C>           <C>      <C>        <C> <C>        <C>
Jonathan J. Ledecky.....      --          --          --
Timothy C. Clayton......  500,000       33.3%      $20.00   11/25/07    0 $5,515,000 $13,580,000
F. Traynor Beck.........  500,000       33.3%      $20.00   11/25/07    0 $5,515,000 $13,580,000
David Ledecky...........  500,000       33.3%      $20.00   11/25/07    0 $5,515,000 $13,580,000
</TABLE>    
 
- --------
   
(1) The options granted are non-qualified options, which are exercisable at
    the market price on the date of grant beginning one year from the date of
    grant in cumulative yearly amounts of 25% of the shares and expire ten
    years from the date of grant. The options became fully exercisable upon a
    change in control, as defined in the Incentive Plan.     
   
(2) The dollar amounts under these columns are the results of calculations at
    assumed annual rates of stock appreciation of zero percent (0%), five
    percent (5%) and ten percent (10%). These assumed rates of growth were
    selected by the Commission for illustration purposes only. They are not
    intended to forecast possible future appreciation, if any, of the
    Company's stock price. No gain to the optionees is possible without an
    increase in stock prices, which will benefit all stockholders. A zero
    percent (0%) gain in stock price will result in a zero percent (0%)
    benefit to optionees.     
 
                                      31
<PAGE>
 
1997 LONG-TERM INCENTIVE PLAN
 
  The Company has adopted the Consolidation Capital Corporation 1997 Long-Term
Incentive Plan (the "Incentive Plan"). The maximum number of shares of Common
Stock that may be subject to outstanding awards may not be greater than that
number of shares equal to 9% of the number of shares of Common Stock
outstanding from time to time. Awards may be settled in cash, shares, other
awards or other property, as determined by the Compensation Committee. The
number of shares reserved or deliverable under the Incentive Plan and the
annual per-participant limit on the number of shares as to or with reference
to which awards may be granted are subject to adjustment in the event of stock
splits, stock dividends and other extraordinary corporate events. The
Incentive Plan may be amended by the Board without the consent of the
stockholders of the Company, except that any amendment, although effective
when made, will be subject to stockholder approval if required by any federal
or state law or regulation or by the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted.
 
  The purpose of the Incentive Plan is to provide executive officers
(including directors who also serve as executive officers), key employees,
consultants and other service providers with additional incentives by enabling
such persons to increase their ownership interests in the Company. Individual
awards under the Incentive Plan may take the form of one or more of: (i)
either incentive stock options ("ISOs") or non-qualified stock options; (ii)
stock appreciation rights ("SARs"); (iii) restricted or deferred stock; (iv)
dividend equivalents; (v) bonus shares and awards in lieu of Company
obligations to pay cash compensation; and (vi) other awards the value of which
is based in whole or in part upon the value of the Common Stock. Upon a change
of control of the Company (as defined in the Incentive Plan), certain
conditions and restrictions relating to an award with respect to the
exercisability or settlement of such award may be accelerated.
   
  The Compensation Committee administers the Incentive Plan and generally will
select the individuals who will receive awards and the terms and conditions of
those awards (including exercise prices, vesting and forfeiture conditions,
performance conditions and periods during which awards will remain
outstanding). The Incentive Plan also provides that no participant may be
granted in any calendar year awards relating to more than 1,000,000 shares and
limits payments under cash-settled awards in any calendar year to an amount
equal to the fair market value of that number of shares.     
 
  Pursuant to the Incentive Plan, non-qualified stock options may, but need
not, be granted at an exercise price less than the fair market value of a
share of Common Stock on the date of grant. If the Company grants non-
qualified stock options at an exercise price less than such grant date fair
market value, then the Company will be required to recognize compensation
expense in an amount equal to the difference between the exercise price and
such fair market value.
 
  The Company generally will be entitled to a tax deduction equal to the
amount of compensation realized by a participant through awards under the
Incentive Plan, except that (i) no deduction is permitted in connection with
ISOs if the participant holds the shares acquired upon exercise for the
required holding periods, and (ii) deductions for some awards could be limited
under the $1 million deductibility cap of Section 162(m) of the Internal
Revenue Code. This limitation, however, should not apply to awards granted
under a plan during a grace period of up to three years following the
Offering, and should not apply to certain options, SARs and performance-based
awards granted thereafter if the Company complies with certain requirements
under Section 162(m).
 
  On November 25, 1997, the Company granted options under the Incentive Plan
to purchase 500,000 shares to each of Timothy Clayton, F. Traynor Beck and
David Ledecky, at an exercise price equal to the initial public offering price
per share ($20.00). The options vest 25% each on the first four anniversaries
of the date of grant, unless accelerated under certain conditions, and expire
on the tenth anniversary of the date of grant.
 
1997 NON-EMPLOYEE DIRECTORS' STOCK PLAN
 
  The Company has adopted the Consolidation Capital Corporation 1997 Non-
Employee Directors' Stock Plan (the "Directors' Plan"), which provides for the
automatic grant to each non-employee director of an option
 
                                      32
<PAGE>
 
("Initial Grant") to purchase 20,000 shares on the later of Effective Date or
the date that such person commences services as a director. Thereafter, each
non-employee director is entitled to receive, on the day after each annual
meeting of the Company's stockholders, an option to purchase 5,000 shares of
Common Stock. A total of 300,000 shares are reserved for issuance under the
Directors' Plan. The number of shares reserved, as well as the number to be
subject to automatically granted options, will be adjusted in the event of
stock splits, stock dividends and other extraordinary corporate events.
 
  Options granted under the Directors' Plan will have an exercise price per
share equal to the fair market value of a share at the date of grant (in the
case of Initial Grants on November 25, 1997, the initial public offering price
per share). Options will expire at the earlier of (i) 10 years from the date
of grant and (ii) one year after the date the director ceases to serve as a
director of the Company for any reason, provided, however, that with respect
to clause (ii), the option will be exercisable during such one-year period
only to the extent it was exercisable on the date of such cessation. Options
will generally vest and become exercisable in two equal installments. The
first installment will become exercisable on the date that is six months from
the date the option is granted and the second installment will be exercisable
on the date that is one year from the date the option is granted. In the event
of a change in control of the Company unless otherwise determined by the
Board, prior to normal vesting, all options not already exercisable will
become fully vested and exercisable under the Directors' Plan. A non-employee
director's death would also cause immediate vesting of his or her non-vested
options. In addition, the Directors' Plan permits non-employee directors to
elect to receive, in lieu of cash directors' fees, nonforfeitable shares or
nonforfeitable credits representing "deferred shares" which will be settled at
future dates, as elected by the director. The number of shares or "deferred
shares" received will be equal to the number of shares which, at the date the
fees would otherwise be payable, will have an aggregate fair market value
equal to the amount of such fees. Each "deferred share" will be settled by
delivery of a share of Common Stock at such time as may have been elected by
the director prior to the deferral.
 
1997 SECTION 162(M) BONUS PLAN
 
  The Company has adopted the Consolidation Capital Corporation 1997 Section
162(m) Bonus Plan (the "Bonus Plan"). Section 162(m) of the Internal Revenue
Code generally disallows a public company's tax deduction in excess of $1
million for compensation to its chief executive officer and the four other
most highly compensated executive officers, subject to several exceptions,
including an exception for compensation paid under a stockholder-approved plan
that is "performance-based" within the meaning of Section 162(m). The Bonus
Plan provides a means for the payment of performance-based bonuses to certain
key executive officers of the Company while preserving the Company's tax
deduction with respect to the payment thereof. The Company believes that, as a
matter of general policy, the Company's incentive compensation plans should be
structured to facilitate compliance with Section 162(m), but that the Company
should reserve the right to establish separate annual and other incentive
compensation arrangements for otherwise covered executive officers that may
not comply with Section 162(m) if it determines, in its sole discretion, that
to do so would be in the best interests of the Company and its stockholders.
   
  The Bonus Plan is administered by the Compensation Committee, which must
consist of at least two non-employee directors, each of whom is intended to
qualify as an "outside director" within the meaning of Section 162(m) of the
Internal Revenue Code. The Compensation Committee has broad administrative
authority to, among other things, designate participants, establish
performance goals and performance periods, determine the effect of participant
termination of employment and "change of control" transactions (as defined in
the Bonus Plan, which is the same definition as that set forth in the
Incentive Plan) prior to payment of an award, pay the bonus in stock under the
Incentive Plan and generally interpret and administer the Bonus Plan. The
Compensation Committee has not, to date, designated any participants or
established any performance goals under the Bonus Plan.     
 
  Participants in the Bonus Plan for any given performance period may include
any key employee of the Company (including any subsidiary, operating unit or
division) who is also an executive officer of the Company, and who is
designated as a participant for such period by the Compensation Committee. The
participants in the Bonus Plan for any given period will be designated by the
Compensation Committee, in its sole discretion, within
 
                                      33
<PAGE>
 
the earlier of each performance period or the date on which 25% of such
performance period has been completed (such period, the "Applicable Period").
This determination may vary from period to period, and will be based primarily
on the Compensation Committee's judgment as to which executive officers are
likely to be named in the Company's proxy statement as the chief executive
officer or one of the other four most highly compensated executive officers of
the Company as of the end of such performance period, and which are reasonably
expected to have compensation in excess of $1 million.
 
  Within the Applicable Period, the Compensation Committee will specify the
applicable performance criteria and targets to be used under the Bonus Plan
for such performance period, which may vary from participant to participant,
and will be based on one or more of the following Company, subsidiary,
operating unit or division financial performance measures: pre-tax or after-
tax net income, operating income, gross revenue, profit margin, stock price,
cash flows, or strategic business criteria consisting of one or more
objectives based upon meeting specified revenue, market penetration,
geographic business expansion goals, cost targets, and goals relating to
acquisitions or divestitures. These performance measures or goals may be (i)
expressed on an absolute or relative basis, (ii) based on internal targets,
(iii) based on comparison(s) with prior performance, (iv) based on
comparison(s) to capital, stockholders' equity, shares outstanding, assets or
net assets, and/or (v) based on comparison(s) to the performance of other
companies. For example, an income-based performance measure could be expressed
in a number of ways, such as net earnings per share, or return on equity, or
with reference to meeting or exceeding a specific target, or with reference to
growth above a specified level, such as prior year's performance or peer group
performance. The Bonus Plan provides that the achievement of such goals must
be substantially uncertain at the time they are established, and are subject
to the Compensation Committee's right to reduce the amount of any award
payable as a result of such performance as discussed below.
 
  The target bonus opportunity for each participant may be expressed as a
dollar-denominated amount or as a percentage share of a bonus pool to be
created under the Bonus Plan, provided that, if a pool approach is used, the
total bonus opportunities represented by the shares designated for the
participants may not exceed 100% of the pool, and the Compensation Committee
has the sole discretion to reduce (but not increase) the actual bonus awarded
under the Plan. The actual bonus awarded to any given participant at the end
of a given performance period will be based on the extent to which the
applicable financial performance goals for such performance period are
achieved as determined by the Compensation Committee. The maximum bonus
payable under the Plan to any one individual in any one calendar year is $3
million. Bonuses earned under the Bonus Plan may be payable in cash, or if
permitted under the Incentive Plan, in Common Stock or other equity based
awards.
 
  The Board may at any time amend or terminate the Bonus Plan, provided that
(i) without a participant's written consent, no such amendment or termination
will adversely affect the annual bonus rights (if any) of any already
designated participant for a given performance period once the participant
designations and performance goals for such performance period have been
announced, (ii) the Board will be authorized to make any amendments necessary
to comply with applicable regulatory requirements (including, without
limitation, Section 162(m)), and (iii) the Board will submit any Bonus Plan
amendments for the approval of the stockholders of the Company if and to the
extent such approval is required under Section 162(m) of the Internal Revenue
Code.
 
1997 EMPLOYEE STOCK PURCHASE PLAN
 
  The Company has adopted the Consolidation Capital Corporation 1997 Employee
Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan permits eligible
employees of the Company and its subsidiaries (generally all employees whose
customary employment is for more than 20 hours per week and who were employed
on the date on which the offering first commenced or have completed one year
of service) to purchase shares of Common Stock at a discount. Employees who
elect to participate will have amounts withheld through payroll deductions
during purchase periods. At the end of each purchase period, accumulated
payroll deductions will be used to purchase stock at a price equal to 85% of
the market price at the beginning of the period or the end of the period,
whichever is lower. Stock purchased under the Purchase Plan will be subject to
a one-year holding period. The Company has reserved 1,000,000 shares of Common
Stock for issuance under the Purchase Plan.
 
 
                                      34
<PAGE>
 
  The Purchase Plan will remain in effect until terminated by the Board or
until no shares of Common Stock are available for issuance under the Purchase
Plan. The Purchase Plan may be amended by the Board without the consent of the
stockholders of the Company, except that any amendment, although effective
when made, will be subject to stockholder approval if required by any federal
or state law or regulation or by the rules of any stock exchange or automated
quotation system on which the Common Stock may then be listed or quoted.
 
OTHER PLANS
 
  The Company intends to adopt a "401(k)" plan. This plan will allow eligible
employees of the Company and its subsidiaries to contribute to the plan on a
pre-tax basis. The Company will likely make matching contributions related to
employee contributions, and may also make year-end discretionary contributions
based on the performance of the Company. It is anticipated that discretionary
contributions will be invested in shares of Common Stock, and that employees
may direct the investment of their own contributions and matching
contributions made on their behalf among several investment options, including
shares of Common Stock.
 
                                      35
<PAGE>
 
             CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
  Set forth below is a description of certain transactions and relationships
between the Company and certain persons who are officers, directors and
principal stockholders of the Company.
 
  Jonathan Ledecky, the Company's Chairman, Chief Executive Officer and
founder, is the brother of David Ledecky, Executive Vice President, Chief
Administrative Officer and a director of the Company.
 
  Jonathan Ledecky advanced to the Company $305,000, at an annual interest
rate equal to 6.75%, to pay the expenses incurred in connection with the IPO.
The Company repaid Jonathan Ledecky's loans to the Company, including accrued
interest of approximately $4,000, using the proceeds of the IPO.
 
  W. Russell Ramsey, a director of the Company, is President and a principal
stockholder of FBR. FBR rendered investment banking services to the Company in
connection with the IPO.
 
  Timothy C. Clayton, Executive Vice President, Chief Financial Officer and
Treasurer of the Company, was, through October 1997, a Partner at Price
Waterhouse LLP, the Company's independent accountants.
 
  F. Traynor Beck, Executive Vice President, General Counsel and Secretary of
the Company, was, until the Effective Date, a partner at Morgan, Lewis &
Bockius LLP, the Company's legal counsel.
 
  For information with respect to certain conflicts of interest, see
"Business--Conflicts of Interest."
 
                                      36
<PAGE>
 
                            PRINCIPAL STOCKHOLDERS
   
  The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of January 20, 1998, by: (i) each person (or
group of affiliated persons) known by the Company to be the beneficial owner
of more than five percent of the outstanding Common Stock; (ii) each director
of the Company; (iii) each executive officer of the Company; and (iv) all of
the Company's directors and executive officers as a group. Each stockholder
possesses sole voting and investment power with respect to the shares listed,
unless otherwise noted.     
<TABLE>   
<CAPTION>
                                                                           PERCENTAGE OF
                                         NUMBER OF SHARES OF                CONVERTIBLE
                           NUMBER OF        CONVERTIBLE      PERCENTAGE OF  NON-VOTING
NAME AND ADDRESS OF        SHARES OF         NON-VOTING      COMMON STOCK  COMMON STOCK
BENEFICIAL OWNER          COMMON STOCK      COMMON STOCK         OWNED         OWNED
- -------------------       ------------   ------------------- ------------- -------------
<S>                       <C>            <C>                 <C>           <C>
Jonathan J. Ledecky.....   4,500,000(1)              0           14.9%            0%
 c/o Consolidation
 Capital Corporation
 1747 Pennsylvania
 Avenue, N.W., Suite 900
 Washington, DC 20006
David Ledecky...........           0                 0              0             0
F. Traynor Beck.........           0                 0              0             0
Timothy C. Clayton......       2,000                 0              *             0
Vincent W. Eades........           0                 0              0             0
W. Russell Ramsey(2)....           0           500,000              0           100%
M. Jude Reyes...........           0                 0              0             0
All directors and
 executive officers as a
 group (7 persons)......   4,502,000           500,000           14.9%          100%
</TABLE>    
- --------
   
*  Less than one percent     
(1) Includes: (i) 1,950,000 shares underlying the Ledecky Warrant and (ii) the
    2,300,000 shares of Common Stock subject to a contractual restriction on
    transfer for one year following the Effective Date. The Company has agreed
    that, at Jonathan Ledecky's request, it will file a registration statement
    under the Securities Act for an offering of the shares underlying the
    Ledecky Warrant during a ten-year period beginning on the Effective Date.
    In addition, the Company has agreed to give Jonathan Ledecky the right to
    request that the Company include the shares underlying the Ledecky Warrant
    on a registration statement filed by the Company during a twelve-year
    period beginning on the Effective Date.
(2) Represents the shares of Convertible Non-Voting Common Stock owned by FBR
    Asset Investment Corporation, Inc., an indirect wholly owned subsidiary of
    FBR Group. Mr. Ramsey is President, co-founder and a director of FBR
    Group. Mr. Ramsey disclaims beneficial ownership of such shares. Mr.
    Ramsey's address is c/o FBR Group, 1001 North 19th Street, Arlington, VA
    22209.
 
                                      37
<PAGE>
 
                         DESCRIPTION OF CAPITAL STOCK
   
  The authorized capital stock of the Company consists of 250,000,000 shares
of Common Stock, par value $.001 per share, and 500,000 shares of Convertible
Non-Voting Common Stock, par value $.001 per share. As of January 20, 1998,
the Company had outstanding 30,150,000 shares of Common Stock and 500,000
shares of Convertible Non-Voting Common Stock. The following summary
description of the capital stock of the Company does not purport to be
complete and is subject to the detailed provisions of, and is qualified in its
entirety by reference to, the Company's Restated Certificate of Incorporation
and Amended and Restated Bylaws and to the applicable provisions of the
General Corporation Law of the State of Delaware (the "DGCL").     
 
COMMON STOCK
 
  The holders of Common Stock are entitled to one vote for each share held of
record on all matters submitted to a vote of the stockholders. Cumulative
voting is not permitted under the Company's Restated Certificate of
Incorporation. Holders of Common Stock are entitled to receive ratably such
dividends as may be declared by the Board of Directors out of funds legally
available. See "Dividend Policy." In the event of a liquidation, dissolution
or winding up of the Company, holders of the Common Stock are entitled to
share ratably in the distribution of all assets remaining after payment of
liabilities, subject to the rights of any holders of preferred stock of the
Company. The holders of Common Stock have no preemptive rights to subscribe
for additional shares of the Company and no right to convert their Common
Stock into any other securities. In addition, there are no redemption or
sinking fund provisions applicable to the Common Stock. All of the outstanding
shares of Common Stock are, and the shares of Common Stock offered hereby will
be, fully paid and nonassessable.
 
CONVERTIBLE NON-VOTING COMMON STOCK
 
  The holders of Convertible Non-Voting Common Stock have the same rights and
privileges as the holders of Common Stock, except that holders of Convertible
Non-Voting Common Stock have no voting rights. The Convertible Non-Voting
Common Stock is non-transferable and will not be publicly traded. Further,
each share of Convertible Non-Voting Common Stock will automatically be
converted into one share of Common Stock on the first anniversary of the date
of this Prospectus.
 
CERTAIN PROVISIONS OF DELAWARE LAW AND THE COMPANY'S RESTATED CERTIFICATE OF
INCORPORATION
 
  The Company is subject to the provisions of Section 203 of the DGCL. Section
203 prohibits a publicly-held Delaware corporation from engaging in a
"business combination" with an "interested stockholder" for a period of three
years after the date of the transaction in which the person became an
interested stockholder, unless the business combination is approved in a
prescribed manner. A "business combination" includes a merger, asset sale or
other transaction resulting in a financial benefit to the interested
stockholder. Subject to certain exceptions, an "interested stockholder" is a
person who, together with affiliates and associates, owns, or within three
years prior to the proposed business combination has owned 15% or more of the
corporation's voting stock.
 
  The Company's Restated Certificate of Incorporation provides that a director
shall not be liable to the Company or its stockholders for monetary damages
for breach of fiduciary duty as a director, except for liability (i) for any
breach of the director's duty of loyalty to the Company or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL
or (iv) for any transaction from which the director derived any improper
personal benefit. The effect of this provision is to eliminate the rights of
the Company and its stockholders (through stockholders' derivative suits on
behalf of the Company) to recover monetary damages against a director for
breach of fiduciary duty of care as a director except in the situation
described in clauses (i) through (iv) above. If the DGCL is subsequently
amended to authorize the further elimination or limitation of the liability of
a director, then the liability of a director of the Company shall be
eliminated or limited to the fullest extent permitted by the DGCL, as so
amended.
 
TRANSFER AGENT AND REGISTRAR
 
  The Transfer Agent and Registrar for the Common Stock is American Stock
Transfer & Trust Company.
 
                                      38
<PAGE>
 
                             PLAN OF DISTRIBUTION
 
  The Company will offer and issue the Common Stock from time to time in
connection with the acquisition by the Company of other businesses, assets or
securities. It is expected that the terms of the acquisitions involving the
issuances of securities covered by this Prospectus will be determined by
direct negotiations with the owners or controlling persons of the businesses,
assets or securities to be acquired by the Company. No underwriting discounts
or commission will be paid, although finder's fees may be paid from time to
time with respect to specific mergers or acquisitions. Any person receiving
such fees may be deemed to be an underwriter within the meaning of the
Securities Act. This Prospectus can, in the Company's discretion, be used for
the resale of shares of Common Stock by persons named in further supplements
to this Prospectus.
 
                            RESTRICTIONS ON RESALE
 
  Affiliates of entities acquired by the Company who do not become affiliates
of the Company may not resell Common Stock registered under the Registration
Statement to which this Prospectus relates except pursuant to an effective
registration statement under the Securities Act covering such shares, or in
compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act.
Generally, Rule 145 permits such affiliates to sell such shares immediately
following the acquisition in compliance with certain volume limitations and
manner of sale requirements. Under Rule 145, sales by such affiliates during
any three-month period cannot exceed the greater of (i) 1% of the shares of
Common Stock of the Company outstanding and (ii) the average weekly reported
volume of trading of such shares of Common Stock on all national securities
exchanges during the four calendar weeks preceding the proposed sale. These
restrictions will cease to apply under most other circumstances if the
affiliate has held the Common Stock for at least one year, provided that the
person or entity is not then an affiliate of the Company. Individuals who are
not affiliates of the entity being acquired and do not become affiliates of
the Company will not be subject to resale restrictions under Rule 145 and,
unless otherwise contractually restricted, may resell Common Stock immediately
following the acquisition without an effective registration statement under
the Securities Act. The ability of affiliates to resell shares of the Common
Stock under Rule 145 will be subject to the Company having satisfied its
Exchange Act reporting requirements for specified periods prior to the time of
sale.
 
                                 LEGAL MATTERS
   
  The validity of the shares of Common Stock offered hereby has been passed
upon for the Company by Morgan, Lewis & Bockius LLP, Washington, D.C.     
 
                                    EXPERTS
   
  The balance sheet of Consolidation Capital Corporation as of September 30,
1997 and the combined financial statements of Service Management USA, Inc. and
Diversified Management Services USA, Inc. as of December 31, 1995 and 1996 and
for the years then ended included in this Prospectus have been so included in
reliance on the reports of Price Waterhouse LLP, independent accountants,
given on the authority of said firm as experts in auditing and accounting.
    
                                      39
<PAGE>
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>   
<S>                                                                       <C>
Consolidation Capital Corporation Unaudited Pro Forma Combined Financial
 Statements
  Introduction to Unaudited Pro Forma Combined Financial Statements......  F-2
  Unaudited Pro Forma Combined Balance Sheet.............................  F-3
  Unaudited Pro Forma Combined Statements of Operations..................  F-4
  Notes to Unaudited Pro Forma Combined Financial Statements.............  F-7
Consolidation Capital Corporation
  Report of Independent Accountants...................................... F-10
  Balance Sheet ......................................................... F-11
  Notes to Balance Sheet................................................. F-12
Service Management USA, Inc. and Diversified Management Services USA,
 Inc.
  Report of Independent Accountants...................................... F-16
  Combined Balance Sheet................................................. F-17
  Combined Statement of Operations....................................... F-18
  Combined Statement of Stockholder's Equity............................. F-19
  Combined Statement of Cash Flows....................................... F-20
  Notes to Combined Financial Statements................................. F-21
</TABLE>    
 
                                      F-1
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                      INTRODUCTION TO UNAUDITED PRO FORMA
                         COMBINED FINANCIAL STATEMENTS
   
  The following unaudited pro forma combined balance sheet gives effect to the
pending acquisition of Service Management USA, Inc. and Diversified Management
Services USA, Inc. ("Service Management"), the IPO and the Concurrent Offering
in December 1997, as if they had occurred as of the Company's most recent
balance sheet date, September 30, 1997.     
   
  The unaudited pro forma combined statements of operations give effect to the
pending acquisition of Service Management as if it had occurred on January 1,
1996.     
   
  The pro forma adjustments are based on estimates, available information and
certain assumptions and may be revised as additional information becomes
available. The pro forma financial data do not purport to represent what the
Company's financial position and results of operations would actually have
been if such transactions in fact had occurred on the assumed dates and are
not necessarily representative of the Company's financial position or results
of operations for any future period. The unaudited pro forma combined
financial statements should be read in conjunction with the other financial
statements and notes thereto included elsewhere in this Prospectus.     
 
                                      F-2
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                        PRO FORMA COMBINED BALANCE SHEET
 
                               SEPTEMBER 30, 1997
                                   UNAUDITED
                                 
                              (IN THOUSANDS)     
 
<TABLE>   
<CAPTION>
                         CONSOLIDATION             PRO FORMA             PRO FORMA
                            CAPITAL     SERVICE     MERGER    PRO FORMA  OFFERING
                          CORPORATION  MANAGEMENT ADJUSTMENTS COMBINED  ADJUSTMENTS AS ADJUSTED
                         ------------- ---------- ----------- --------- ----------- -----------
<S>                      <C>           <C>        <C>         <C>       <C>         <C>
         ASSETS
Current assets:
  Cash and cash
   equivalents..........     $ 16        $  339     $(9,000)   $(8,645)  $527,359    $518,714
  Marketable
   securities...........                    144                    144                    144
  Accounts receivable,
   net..................                  2,497                  2,497                  2,497
  Prepaid expenses and
   other current
   assets...............      315           132                    447       (315)        132
                             ----        ------     -------    -------   --------    --------
    Total current
     assets.............      331         3,112      (9,000)    (5,557)   527,044     521,487
Property and equipment,
 net....................        8         2,350                  2,358                  2,358
Other assets............                     30                     30                     30
Intangibles.............                    147       8,759      8,906                  8,906
                             ----        ------     -------    -------   --------    --------
    Total assets........     $339        $5,639     $  (241)   $ 5,737   $527,044    $532,781
                             ====        ======     =======    =======   ========    ========
    LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
  Current maturities,
   long term debt.......     $206        $   21                $   227   $   (206)   $     21
  Current maturities,
   capital leases.......                     72                     72                     72
  Accounts payable......                  1,948                  1,948                  1,948
  Accrued liabilities
   and other............      110           430     $   300        840       (110)        730
                             ----        ------     -------    -------   --------    --------
    Total current
     liabilities........      316         2,471         300      3,087       (316)      2,771
Long-term debt..........                     36                     36                     36
Capital lease
 obligations............                     41                     41                     41
                             ----        ------     -------    -------   --------    --------
    Total liabilities...      316         2,548         300      3,164       (316)      2,848
Stockholders' equity:
  Common Stock..........        2           153        (153)         2         28          30
  Convertible Non Voting
   Common Stock.........                                                        1           1
  Additional paid-in
   capital..............      124           110       2,440      2,674    527,331     530,005
  Retained earnings.....     (103)        2,828      (2,828)      (103)                  (103)
                             ----        ------     -------    -------   --------    --------
    Total stockholders'
     equity.............       23         3,091        (541)     2,573    527,360     529,933
                             ----        ------     -------    -------   --------    --------
    Total liabilities
     and stockholders'
     equity.............     $339        $5,639     $  (241)   $ 5,737   $527,044    $532,781
                             ====        ======     =======    =======   ========    ========
</TABLE>    
 
                                      F-3
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
                   
                PRO FORMA COMBINED STATEMENT OF OPERATIONS     
 
                      FOR THE YEAR ENDED DECEMBER 31, 1996
                                   UNAUDITED
                 
              (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)     
 
<TABLE>   
<CAPTION>
                                CONSOLIDATION             PRO FORMA
                                   CAPITAL     SERVICE     MERGER    PRO FORMA
                                 CORPORATION  MANAGEMENT ADJUSTMENTS COMBINED
                                ------------- ---------- ----------- ---------
<S>                             <C>           <C>        <C>         <C>
Revenue........................                $12,074               $  12,074
Cost of revenues...............                  8,735                   8,735
                                     ---       -------      -----    ---------
  Gross profit.................                  3,339                   3,339
Selling, general &
 administrative expenses.......                  2,169      $(177)       1,992
Goodwill amortization..........                               211          211
                                     ---       -------      -----    ---------
  Operating income.............                  1,170        (34)       1,136
Other (income) expense:
  Interest expense.............                      4                       4
  Realized and unrealized
   (gains) losses on trading
   securities..................                    (64)                    (64)
                                     ---       -------      -----    ---------
Income before provision for
 income taxes                                    1,230        (34)       1,196
Provision for income taxes.....                     19        459          478
                                     ---       -------      -----    ---------
Net income (loss)..............                $ 1,211      $(493)   $     718
                                     ===       =======      =====    =========
Net income per share...........                                      $    0.24
                                                                     =========
Shares used to compute net
 income per share(3)...........                                      2,946,057
                                                                     =========
</TABLE>    
 
                                      F-4
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
                   
                PRO FORMA COMBINED STATEMENT OF OPERATIONS     
 
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
                                  (UNAUDITED)
 
<TABLE>   
<CAPTION>
                                 CONSOLIDATION             PRO FORMA
                                    CAPITAL     SERVICE     MERGER    PRO FORMA
                                  CORPORATION  MANAGEMENT ADJUSTMENTS COMBINED
                                 ------------- ---------- ----------- ---------
<S>                              <C>           <C>        <C>         <C>
Revenue.........................                $18,810               $  18,810
Cost of revenues................                 14,035                  14,035
                                     -----      -------     -------   ---------
  Gross profit..................                  4,775                   4,775
Selling, general &
 administrative expenses........     $ 103        2,548     $   159       2,810
Goodwill amortization...........                                158         158
                                     -----      -------     -------   ---------
  Operating income..............      (103)       2,227        (317)      1,807
Other (income) expense:
  Interest expense..............                     21                      21
  Realized and unrealized
   (gains) losses on trading
   securities...................
                                     -----      -------     -------   ---------
Income before provision for
 income taxes...................      (103)       2,206        (317)      1,786
Provision for income taxes......                     30         685         715
                                     -----      -------     -------   ---------
Net income (loss)...............     $(103)     $ 2,176     $(1,002)  $   1,071
                                     =====      =======     =======   =========
Net income per share............                                      $    0.36
                                                                      =========
Shares used in net income per
 share(3).......................                                      2,948,057
                                                                      =========
</TABLE>    
 
                                      F-5
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
                   
                PRO FORMA COMBINED STATEMENT OF OPERATIONS     
 
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
                                  (UNAUDITED)
 
<TABLE>   
<CAPTION>
                                CONSOLIDATION             PRO FORMA
                                   CAPITAL     SERVICE     MERGER    PRO FORMA
                                 CORPORATION  MANAGEMENT ADJUSTMENTS COMBINED
                                ------------- ---------- ----------- ---------
<S>                             <C>           <C>        <C>         <C>
Revenues.......................                 $7,749               $   7,749
Cost of Revenues...............                  5,501                   5,501
                                    ----        ------      -----    ---------
  Gross profit.................                  2,248                   2,248
Selling, general &
 administrative expenses.......                  1,370      $ (53)       1,317
Goodwill Amortization..........                               158          158
                                    ----        ------      -----    ---------
  Operating income.............                    878       (105)         773
Other (income) expense:
  Interest expense.............
  Realized and unrealized
   (gains) losses on trading
   securities..................                    (52)                    (52)
                                    ----        ------      -----    ---------
Income before provision for
 income taxes..................                    930       (105)         825
Provision for income taxes.....                     14        316          330
                                    ----        ------      -----    ---------
Net income (loss)..............                 $  916      $(421)         495
                                    ====        ======      =====    =========
Net income per share...........                                      $    0.17
                                                                     =========
Shares used to compute net
 income per share (3)..........                                      2,946,057
                                                                     =========
</TABLE>    
 
                                      F-6
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
          NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
                     (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
 
NOTE 1--UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
   
  The unaudited pro forma combined balance sheet reflects the following
adjustments:     
       
<TABLE>   
<CAPTION>
                                                       OFFERING
                                         PRO FORMA   ADJUSTMENTS      PRO FORMA
                                          MERGER    ---------------   OFFERING
                            (A)    (B)  ADJUSTMENTS   (C)      (D)   ADJUSTMENTS
                          -------  ---- ----------- --------  -----  -----------
<S>                       <C>      <C>  <C>         <C>       <C>    <C>
         ASSETS
Current assets:
 Cash and cash
  equivalents...........  $(9,000)        $(9,000)  $527,565  $(206)  $527,359
 Marketable securities..
 Accounts receivable,
  net...................
 Prepaid and other
  current assets........                                (315)             (315)
                          -------  ----   -------   --------  -----   --------
 Total current assets...   (9,000)         (9,000)   527,250   (206)   527,044
Property and equipment,
 net....................
Other assets............
Goodwill, net...........    8,459  $300     8,759
                          -------  ----   -------   --------  -----   --------
 Total assets...........  $  (541) $300   $  (241)  $527,250  $(206)  $527,044
                          =======  ====   =======   ========  =====   ========
    LIABILITIES AND
  STOCKHOLDERS' EQUITY
Current liabilities:
 Current maturities,
  long-term debt .......                                      $(206)  $   (206)
 Current maturities,
  capital leases .......
 Accounts payable ......
 Accrued liabilities and
  other ................           $300   $   300   $   (110)             (110)
                          -------  ----   -------   --------  -----   --------
 Total current
  liabilities ..........            300       300       (110)  (206)      (316)
Subordinated debt to
 stockholders ..........
Long-term debt, less
 current maturities.....
Other long-term
 liabilities............
                          -------  ----   -------   --------  -----   --------
 Total liabilities......            300       300       (110)  (206)      (316)
Stockholders' equity....
 Common stock...........     (153)           (153)        28                28
 Convertible non-voting
  common stock..........                                   1                 1
 Additional paid-in
  capital...............    2,440           2,440    527,331           527,331
 Retained earnings......   (2,828)         (2,828)
                          -------  ----   -------   --------  -----   --------
 Total stockholders'
  equity................     (541)           (541)   527,360           527,360
                          -------  ----   -------   --------  -----   --------
 Total liabilities and
  stockholders' equity..  $  (541) $300   $  (241)  $527,250  $(206)  $527,044
                          =======  ====   =======   ========  =====   ========
</TABLE>    
- --------
   
  (A) Reflects the pending acquisition of Service Management (the "Pending
Acquisition") consisting of $9,000 in cash and 150,000 shares of common stock
valued at $2,550, for a total estimated purchase price of $11,550 resulting in
excess purchase price over the fair value of net assets acquired of $8,759.
For purposes of computing the estimated purchase price for accounting
purposes, the value of the shares was determined in consideration of
restrictions on the sale and transferability of the shares issued. The shares
will be subject to the following restrictions on resale: up to one-third of
the shares may be resold beginning twelve months after their date of
acquisition, the first one-third and an additional one-third may be resold
beginning eighteen months after their date of acquisition and the first two-
thirds and the remaining one-third may be resold beginning twenty-four months
after their date of acquisition.     
   
  (B) Records the net deferred income tax liability attributable to the
temporary differences between the financial reporting and tax base of assets
and liabilities of the Pending Acquisition.     
   
  (C) Records the cash proceeds from the issuance of shares of the Company's
Common Stock during December 1997 net of estimated offering costs. Offering
costs primarily consist of underwriting discounts and commissions, accounting
fees, legal fees and printing expenses.     
   
  (D) Records the reduction in certain indebtedness of the Company paid from
proceeds of the initial public offering.     
 
                                      F-7
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
                    (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
 
 
NOTE 2--UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
   
  The unaudited pro forma combined statements of operations reflect the
following adjustments:     
   
  For the year ended December 31, 1996:     
 
<TABLE>   
<CAPTION>
                                                                      TOTAL
                                                                    PRO FORMA
                                               (A)    (B)    (C)   ADJUSTMENTS
                                              -----  -----  -----  -----------
<S>                                           <C>    <C>    <C>    <C>
Revenues.....................................
Cost of Revenues.............................
                                              -----  -----  -----     -----
  Gross profit...............................
Selling, general and administrative
 expenses.................................... $(177)                  $(177)
Goodwill Amortization........................        $ 211              211
                                              -----  -----  -----     -----
  Operating income (loss)....................   177   (211)             (34)
Other (income) expense:
  Interest expense...........................
  Other, net.................................
                                              -----  -----  -----     -----
Income (loss) before provision for income
 taxes.......................................   177   (211)             (34)
Provision for income taxes...................                 459       459
                                              -----  -----  -----     -----
Net income (loss)............................ $ 177  $(211) $(459)    $(493)
                                              =====  =====  =====     =====
</TABLE>    
       
          
  For the nine months ended September 30, 1997:     
 
<TABLE>   
<CAPTION>
                                                                      TOTAL
                                                                    PRO FORMA
                                               (A)    (B)    (C)   ADJUSTMENTS
                                              -----  -----  -----  -----------
<S>                                           <C>    <C>    <C>    <C>
Revenues.....................................
Cost of revenues.............................
                                              -----  -----  -----    -------
  Gross profit...............................
Selling, general and administrative
 expenses.................................... $ 159                  $   159
Goodwill amortization........................        $ 158               158
                                              -----  -----  -----    -------
  Operating income (loss)....................  (159)  (158)             (317)
Other (income) expense:
  Interest expense...........................
  Other, net.................................
                                              -----  -----  -----    -------
Income (loss) before provision for income
 taxes.......................................  (159)  (158)             (317)
Provision for income taxes...................                 685        685
                                              -----  -----  -----    -------
Net income (loss)............................ $(159) $(158) $(685)   $(1,002)
                                              =====  =====  =====    =======
</TABLE>    
 
                                      F-8
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
    NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
   
  For the nine months ended September 30, 1996:     
 
<TABLE>   
<CAPTION>
                                                                       TOTAL
                                                                     PRO FORMA
                                                (A)    (B)    (C)   ADJUSTMENTS
                                                ----  -----  -----  -----------
<S>                                             <C>   <C>    <C>    <C>
Revenues......................................
Cost of revenues..............................
                                                ----  -----  -----     -----
  Gross profit................................
Selling, general and administrative expenses..  $(53)                  $ (53)
Goodwill amortization.........................        $ 158              158
                                                ----  -----  -----     -----
  Operating income (loss).....................    53   (158)            (105)
Other (income) expense:
  Interest expense............................
  Other, net..................................
                                                ----  -----  -----     -----
Income (loss) before provision for income
 taxes........................................    53   (158)            (105)
Provision for income taxes....................               $ 316       316
                                                ----  -----  -----     -----
Net income (loss).............................  $ 53  $(158) $(316)    $(421)
                                                ====  =====  =====     =====
</TABLE>    
- --------
   
(A) Reflects the modifications in salaries, bonuses and benefits to the owners
    of the Pending Acquisition to which they have agreed prospectively.     
   
(B) Reflects the amortization of goodwill to be recorded as a result of the
    combination over a 40 year estimated life.     
   
(C) Reflects the incremental provision for federal and state income taxes
    assuming the Pending Acquisition was subject to federal and state income
    tax and relating to the other statements of operations' adjustments and
    assuming the amortization of goodwill is tax deductible.     
       
          
NOTE 3--UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS
(CONTINUED)     
   
  Includes (i) 2,300,000 shares issued to existing stockholder of the Company,
(ii) 150,000 shares issued to the owner of the Pending Acquisition, and (iii)
496,057 of the 27,850,000 shares issued in the Company's initial public
offering in December 1997.     
 
                                      F-9
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
 
To the Board of Directors and Stockholder of Consolidation Capital Corporation
 
  In our opinion, the accompanying balance sheet presents fairly, in all
material respects, the financial position of Consolidation Capital Corporation
at September 30, 1997, in conformity with generally accepted accounting
principles. This financial statement is the responsibility of the Company's
management; our responsibility is to express an opinion on this financial
statement based on our audit. We conducted our audit of this statement in
accordance with generally accepted auditing standards which require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statement is free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statement, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for the opinion expressed above.
 
Price Waterhouse LLP
 
Minneapolis, Minnesota
   
November 17, 1997,     
except as to the first
paragraph of Note 2,
which is as of November 25, 1997
 
                                     F-10
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                                 BALANCE SHEET
                (DOLLARS IN THOUSANDS, EXCEPT SHARE INFORMATION)
 
<TABLE>
<CAPTION>
                                                             SEPTEMBER 30, 1997
                                                             ------------------
<S>                                                          <C>
                           ASSETS
Cash........................................................       $  16
Deferred stock issuance costs...............................         315
Computer equipment..........................................           8
                                                                   -----
    Total assets............................................        $339
                                                                   =====
            LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities:
  Accrued liabilities.......................................       $ 110
  Payable to stockholder....................................         206
                                                                   -----
    Total liabilities.......................................         316
                                                                   -----
Stockholder's equity:
  Common stock, $.001 par, 250,000,000 shares authorized,
   2,300,000 shares issued and outstanding..................           2
  Additional paid-in capital................................         124
  Accumulated deficit.......................................        (103)
                                                                   -----
    Total stockholder's equity..............................          23
                                                                   -----
    Total liabilities and stockholder's equity..............       $ 339
                                                                   =====
</TABLE>
 
 
    The accompanying notes are an integral part of this financial statement.
 
                                      F-11
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                            NOTES TO BALANCE SHEET
                            (DOLLARS IN THOUSANDS)
 
NOTE 1--BUSINESS AND ORGANIZATION
 
  Consolidation Capital Corporation, a Delaware corporation (the "Company"),
was incorporated in September 1997. Ledecky Brothers L.L.C., ("LLC"), a
limited liability corporation, merged with and into the Company in September
1997 (the "Merger"). The sole member of LLC received, in connection with the
Merger, 2,300,000 shares of Common Stock of the Company which represents all
of its issued and outstanding Common Stock, in exchange for 100% of his
ownership interest in the LLC. The Merger was implemented to facilitate a
public offering of securities. On September 23, 1997, the Company filed a
registration statement on Form S-1 for the purpose of the public offering of
Common Stock. Each of LLC and the Company adopted a year-end of December 31.
 
  LLC, the predecessor company, was created in February 1997 to pursue
industry consolidation activities and research. Neither the Company nor LLC
had any operations which generated revenue. The only activities included the
payment of a salary and miscellaneous operating expenses incurred in
connection with the analysis of industry consolidation opportunities. The
Company has also incurred and deferred certain stock issuance costs.
Accordingly, statements of operations and cash flows and earnings per share
information for this period would not provide meaningful information and have
been omitted. Because both of the organizations were under control of the one
sole owner, the Merger has been accounted for on a historical cost basis.
 
  LLC was a nontaxable entity and the tax benefits flowed through to the
member. Accordingly, no future tax benefits attributable to the accumulated
losses of LLC will be available to the Company.
 
NOTE 2--STOCKHOLDER'S EQUITY
 
 Common Stock
   
  On November 25, 1997, the Company effected a one-for-1.918159 reverse stock
split of the Company's Common Stock. Accordingly, all share data reflected in
this financial statement have been retroactively restated.     
 
  On September 19, 1997, the sole member of LLC received 2,300,000 shares of
Common Stock of the Company in connection with the Merger in exchange for his
100% ownership interest in LLC. The sole member made contributions to LLC from
time to time to fund expenses in the aggregate amount of $126. These
contributions were included in common stock and additional paid-in capital at
September 30, 1997.
 
 Common Stock Warrants
 
  Conditioned upon the execution of the underwriting agreement in connection
with the public offering of Common Stock, the Company's Board of Directors has
authorized the delivery to Friedman, Billings, Ramsey & Co. Inc. ("FBR"), as
representative of the underwriters, warrants to purchase 1,130,000 shares of
Common Stock at an exercise price per share equal to the initial public
offering price per share. These warrants will be exercisable on or after the
first anniversary and until the fifth anniversary of the initial public
offering.
 
  Additionally, 1,950,000 shares of the Company's Common Stock have been
reserved for issuance upon the exercise of a warrant to be issued to Jonathan
Ledecky at the time of the initial public offering. This warrant will be
exercisable immediately following issuance for a period of ten years at an
exercise price equal to the initial public offering price.
 
 Convertible Non-Voting Common Stock
 
  In November 1997, the Company's Board of Directors authorized 500,000 shares
of Convertible Non-Voting Common Stock (par value of $.001 per share).
Conditioned upon the execution of the underwriting
 
                                     F-12
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                      NOTES TO BALANCE SHEET--(CONTINUED)
                            (DOLLARS IN THOUSANDS)
 
 
NOTE 2--STOCKHOLDER'S EQUITY (CONTINUED)
 
agreement in connection with the public offering of Common Stock, it is
anticipated that an affiliate of FBR will purchase all of the authorized
shares of Convertible Non-Voting Common Stock from the Company at a price
equal to the initial public offering price per share. After one year, the
shares of Convertible Non-Voting Common Stock will automatically convert into
an equivalent number of shares of Common Stock.
 
 1997 Long-Term Incentive Plan
 
  The Company's Board of Directors has adopted, and the Company's stockholder
has approved, the Company's 1997 Long-Term Incentive Plan (the "Incentive
Plan"). The terms of the option awards will be established by the Compensation
Committee of the Company's Board of Directors. The Company intends to file a
registration statement on Form S-8 under the Securities Act of 1933 as soon as
practicable after the consummation of the offering with respect to the shares
of Common Stock issuable pursuant to such plans. The maximum number of shares
that may be issued under the Incentive Plan is equal to 9% of the number of
shares of Common Stock outstanding from time to time.
 
  Options to purchase 1,500,000 shares of Common Stock under the Incentive
Plan are expected to be granted at the time of the public offering at an
exercise price equal to the initial public offering price per share. The
options to be granted are expected to vest 25% each on the first four
anniversaries of the date of grant and are expected to expire on the tenth
anniversary of the grant date. In the event of a change in control of the
Company prior to normal vesting, all options not already exercisable will
become fully vested and exercisable.
 
 1997 Non-Employee Directors' Stock Plan
 
  The Company's Board of Directors has adopted, and the Company's stockholder
has approved, the 1997 Non-Employee Directors' Stock Plan (the "Directors'
Plan"), which provides for the automatic grant to each nonemployee director of
an option to purchase 20,000 shares on the later of the effective date of the
registration statement for the initial public offering of the Company's Common
Stock or the date that such person commences services as a director.
Thereafter, each non-employee director will be entitled to receive, on the day
after each annual meeting of the Company's stockholders, an option to purchase
5,000 shares of Common Stock. A maximum of 300,000 shares of Common Stock may
be issued under the Directors' Plan. Options to purchase 60,000 shares of
Common Stock under the Directors' Plan are expected to be granted at the time
of the public offering at an exercise price equal to the initial public
offering price per share.
 
  Options granted under the Directors' Plan will have an exercise price per
share equal to the fair market value of a share at the date of grant. Options
will expire at the earlier of 10 years from the date of grant or 90 days after
termination of service as a director. Options will vest and become exercisable
ratably as to 50% of the shares underlying the Option on the first and second
anniversaries of the date of grant, subject to acceleration by the Board. In
the event of a change in control of the Company prior to normal vesting, all
options not already exercisable will become fully vested and exercisable.
 
 1997 Employee Stock Purchase Plan
 
  The Company has adopted, and the Company's stockholder has approved, the
1997 Employee Stock Purchase Plan (the "Purchase Plan"). The Purchase Plan
permits eligible employees of the Company and its subsidiaries (generally all
full-time employees who have completed one year of service) to purchase shares
of Common Stock at a discount. Employees who elect to participate will have
amounts withheld through payroll deduction during purchase periods. At the end
of each purchase period, accumulated payroll deductions will be used to
purchase stock at a price equal to 85% of the market price at the beginning of
the period or the end of
 
                                     F-13
<PAGE>
 
                       CONSOLIDATION CAPITAL CORPORATION
 
                      NOTES TO BALANCE SHEET--(CONTINUED)
                            (DOLLARS IN THOUSANDS)
 
NOTE 2--STOCKHOLDER'S EQUITY (CONTINUED)
 
the period, whichever is lower. Stock purchased under the Purchase Plan will
be subject to a one-year holding period. The Company has reserved 1,000,000
shares of Common Stock for issuance under the Purchase Plan.
 
NOTE 3--DEFERRED STOCK ISSUANCE COSTS
 
  At September 30, 1997, the Company had incurred approximately $315 of costs
in connection with the contemplated public offering of Common Stock, comprised
as follows:
 
<TABLE>
   <S>                                                                     <C>
   Securities and Exchange Commission registration fee.................... $174
   NASD fee...............................................................   31
   Printing expenses......................................................   10
   Accounting fees........................................................   25
   Legal fees.............................................................   75
                                                                           ----
                                                                           $315
                                                                           ====
</TABLE>
 
  These costs have been deferred and reflected as an asset in the accompanying
September 30, 1997 balance sheet. After receipt of the proceeds from the
public offering, the stock issuance costs will be reclassified to additional
paid-in capital in the Company's balance sheet as a reduction to the gross
proceeds from the offering. At September 30, 1997, $205 of the stock issuance
costs had been paid. The remainder of these costs have been included in
accrued liabilities and are expected to be paid using the proceeds from the
Common Stock offering.
 
NOTE 4--PAYABLE TO STOCKHOLDER
 
  Jonathan Ledecky, the sole stockholder, has advanced to the Company $206 to
pay certain fees in connection with the registration of the Common Stock. Such
demand notes bear interest at 6.75% annually. The Company intends to repay
such stockholder payable and related accrued interest using the proceeds from
the Common Stock offering.
 
NOTE 5--STOCK-BASED COMPENSATION
 
  Statement of Financial Accounting Standards ("SFAS") No. 123, "Accounting-
for-Stock-Based Compensation," allows entities to choose between a fair value
based method of accounting for employee stock options or similar equity
instruments and the intrinsic, value-based method of accounting prescribed by
Accounting Principles Board Opinion No. 25 ("APB No. 25"). Entities electing
to apply the accounting in APB No. 25 must make pro forma disclosures of net
income and earnings per share as if the fair value method of accounting has
been applied. The Company will provide pro forma disclosure of net income and
earnings per share, as applicable, in the notes to future financial
statements.
 
NOTE 6--NEW ACCOUNTING PRONOUNCEMENTS
 
  In February 1997, the Financial Accounting Standards Board issued SFAS
No. 128, "Earnings Per Share." For the Company, SFAS No. 128 will be effective
for the year ending December 31, 1997. SFAS No. 128 simplifies the standards
required under current accounting rules for computing earnings per share and
replaces the presentation of primary earnings per share and fully diluted
earnings per share with a presentation of basic earnings per share ("basic
EPS") and diluted earnings per share ("diluted EPS"). Basic EPS excludes
dilution and is determined by dividing income available to common stockholders
by the weighted average number of common shares outstanding during the period.
Diluted EPS reflects the potential dilution that could occur if securities and
other contracts to issue common stock were exercised or converted into common
stock. Diluted EPS is computed similarly to fully diluted earnings per share
under current accounting rules.
 
                                     F-14
<PAGE>
 
                       
                    CONSOLIDATION CAPITAL CORPORATION     
                      
                   NOTES TO BALANCE SHEET--(CONTINUED)     
                             
                          (DOLLARS IN THOUSANDS)     
   
NOTE 7--SUBSEQUENT EVENTS (UNAUDITED)     
   
  The Company completed its initial public offering in December 1997, selling
27,850,000 shares of Common Stock and 500,000 shares of Convertible Non-Voting
Common Stock and raising net proceeds of approximately $527 million.     
   
  On January 8, 1998, the Company entered into a letter of intent to acquire
Service Management USA, Inc. and its affiliates ("Service Management").
Service Management is a Sterling, Virginia-based provider of facilities
management services specializing in providing janitorial maintenance
management services to retailers and industrial and commercial clients in 39
states.     
   
  The letter of intent with Service Management provides for consideration of
$9 million payable in cash and $3 million payable in shares of Common Stock
valued at the closing price of the Common Stock on the date the letter of
intent was signed. In addition, there is the potential for the payment of up
to an additional $13 million, consisting of 50% in cash and 50% in shares of
Common Stock, based upon a combination of the earnings before interest and
taxes of Service Management during the twelve months subsequent to the
Company's completion of the acquisition of Service Management, and the
revenues of Service Management, including the revenues of certain companies
identified by Service Management that may be acquired by the Company in the
future, during the two years subsequent to the completion of the acquisition
of Service Management.     
 
                                     F-15
<PAGE>
 
                       REPORT OF INDEPENDENT ACCOUNTANTS
 
To the Board of Directors and Stockholder of
Service Management USA, Inc. and
Diversified Management Services USA, Inc.
   
  In our opinion, the accompanying combined balance sheet and the related
combined statements of operations, of stockholder's equity and of cash flows
present fairly, in all material respects, the financial position of Service
Management USA, Inc. and Diversified Management Services USA, Inc. (the
"Company") at December 31, 1995 and 1996 and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for the opinion expressed above.     
 
Price Waterhouse LLP
 
Minneapolis, Minnesota
January 20, 1998
 
 
                                     F-16
<PAGE>
 
                        SERVICE MANAGEMENT USA, INC. AND
                    
                 DIVERSIFIED MANAGEMENT SERVICES USA, INC.     
 
                             COMBINED BALANCE SHEET
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>   
<CAPTION>
                                                    DECEMBER 31,  SEPTEMBER 30,
                                                    ------------- -------------
                                                     1995   1996      1997
                                                    ------ ------ -------------
                                                                   (UNAUDITED)
<S>                                                 <C>    <C>    <C>
                      ASSETS
Cash and cash equivalents.......................... $  210 $  425    $  339
Marketable securities..............................     44     36       144
Accounts receivable, net of an allowance for
 doubtful accounts of $98 and $295, respectively...    634  1,660     2,497
Employee receivables...............................      8      5        47
Prepaid expenses...................................            92        85
                                                    ------ ------    ------
    Total current assets...........................    896  2,218     3,112
Property and equipment, net........................    221  1,159     2,350
Deposits...........................................      1     26        30
Intangibles........................................           167       147
                                                    ------ ------    ------
    Total assets................................... $1,118 $3,570    $5,639
                                                    ====== ======    ======
       LIABILITIES AND STOCKHOLDER'S EQUITY
Current maturities, long-term debt.................        $  165    $   21
Current obligations, capital leases................            43        72
Accounts payable................................... $  161    954     1,948
Accrued liabilities................................    118    793       400
Income taxes payable...............................            19        30
                                                    ------ ------    ------
    Total current liabilities......................    279  1,974     2,471
Long-term debt.....................................     11     94        36
Capital lease obligations..........................           100        41
                                                    ------ ------    ------
    Total liabilities..............................    290  2,168     2,548
Stockholder's equity:
  Common stock, Service Management USA, Inc., $1
   par value, 1,000 shares authorized, issued and
   outstanding.....................................      1      1         1
  Common stock, Diversified Management Services
   USA, Inc., no par value, 200 shares authorized,
   issued and outstanding                                     152       152
  Additional paid-in capital.......................     42    110       110
  Retained earnings................................    785  1,139     2,828
                                                    ------ ------    ------
    Total stockholder's equity.....................    828  1,402     3,091
                                                    ------ ------    ------
    Total liabilities and stockholder's equity..... $1,118 $3,570    $5,639
                                                    ====== ======    ======
</TABLE>    
 
                         The accompanying notes are an
             integral part of these combined financial statements.
 
 
                                      F-17
<PAGE>
 
                        SERVICE MANAGEMENT USA, INC. AND
                    
                 DIVERSIFIED MANAGEMENT SERVICES USA, INC.     
 
                        COMBINED STATEMENT OF OPERATIONS
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                              YEAR ENDED    NINE MONTHS ENDED
                                             DECEMBER 31,     SEPTEMBER 30,
                                            --------------  -------------------
                                             1995   1996      1996      1997
                                            ------ -------  --------  ---------
                                                               (UNAUDITED)
<S>                                         <C>    <C>      <C>       <C>
Revenues................................... $4,964 $12,074  $  7,749  $  18,810
Cost of revenues...........................  3,650   8,735     5,501     14,035
                                            ------ -------  --------  ---------
    Gross profit...........................  1,314   3,339     2,248      4,775
Selling, general and administrative
 expenses..................................    617   2,169     1,370      2,548
                                            ------ -------  --------  ---------
    Operating income.......................    697   1,170       878      2,227
Other (income) expense:
  Interest expense.........................      2       4                   21
  Realized and unrealized (gains) losses on
   trading securities......................     40     (64)      (52)
                                            ------ -------  --------  ---------
Income before income taxes.................    655   1,230       930      2,206
Provision for state income taxes...........             19        14         30
                                            ------ -------  --------  ---------
Net income................................. $  655 $ 1,211  $    916  $   2,176
                                            ====== =======  ========  =========
Unaudited pro forma information (see Note
 2):
  Pro forma net income before provision for
   income taxes............................ $  655 $ 1,230  $    930  $   2,206
  Provision for income taxes...............    262     492       372        882
                                            ------ -------  --------  ---------
  Pro forma net income..................... $  393 $   738  $    558  $   1,324
                                            ====== =======  ========  =========
</TABLE>    
 
 
 
                         The accompanying notes are an
             integral part of these combined financial statements.
 
 
                                      F-18
<PAGE>
 
                        SERVICE MANAGEMENT USA, INC. AND
                    
                 DIVERSIFIED MANAGEMENT SERVICES USA, INC.     
 
                   COMBINED STATEMENT OF STOCKHOLDER'S EQUITY
                       (IN THOUSANDS, EXCEPT SHARE DATA)
 
<TABLE>   
<CAPTION>
                                              ADDITIONAL              TOTAL
                                               PAID-IN-  RETAINED STOCKHOLDER'S
                             COMMON STOCK      CAPITAL   EARNINGS    EQUITY
                          ------------------- ---------- -------- -------------
                          SERVICE DIVERSIFIED
                          ------- -----------
<S>                       <C>     <C>         <C>        <C>      <C>
Balance, December 31,
 1994....................   $ 1                  $ 42     $  316     $  359
  Net income.............                                    655        655
  Dividends..............                                   (186)      (186)
                            ---      ----        ----     ------     ------
Balance, December 31,
 1995....................     1                    42        785        828
  Issuance of common
   stock, Diversified
   Management Services
   USA, Inc..............             152                               152
  Capital contribution...                          68                    68
  Net income.............                                  1,211      1,211
  Dividends..............                                   (857)      (857)
                            ---      ----        ----     ------     ------
Balance, December 31,
 1996....................     1       152         110      1,139      1,402
  Net income.............                                  2,176      2,176
  Dividends..............                                   (487)      (487)
                            ---      ----        ----     ------     ------
Balance, September 30,
 1997 (unaudited)........   $ 1      $152        $110     $2,828     $3,091
                            ===      ====        ====     ======     ======
</TABLE>    
 
 
 
                         The accompanying notes are an
             integral part of these combined financial statements.
 
 
                                      F-19
<PAGE>
 
                        SERVICE MANAGEMENT USA, INC. AND
                    
                 DIVERSIFIED MANAGEMENT SERVICES USA, INC.     
 
                        COMBINED STATEMENT OF CASH FLOWS
                                 (IN THOUSANDS)
 
<TABLE>   
<CAPTION>
                                              YEAR ENDED     NINE MONTHS ENDED
                                             DECEMBER 31,      SEPTEMBER 30,
                                             --------------  ------------------
                                             1995    1996     1996      1997
                                             -----  -------  -------- ---------
                                                                (UNAUDITED)
<S>                                          <C>    <C>      <C>      <C>
Cash flows from operating activities:
 Net income................................  $ 655  $ 1,211  $   916  $   2,176
 Adjustments to reconcile net income to net
  cash provided by operating activities:
  Provision for doubtful accounts..........     98      197      215         60
  Depreciation and amortization............     24      245      163        361
  Loss on write-off of assets..............              21
  Unrealized/realized (gain) loss of
   marketable trading securities...........     40      (64)     (52)
  Changes in operating assets and liabili-
   ties:
   Accounts receivable.....................   (346)  (1,224)    (573)      (896)
   Prepaid expenses and other current as-
    sets...................................     (2)    (129)     (46)       (40)
   Accounts payable and accrued liabili-
    ties...................................    138    1,468      656        601
   Income taxes payable....................              19       14         11
                                             -----  -------  -------  ---------
    Net cash provided by operating activi-
     ties..................................    607    1,744    1,293      2,273
                                             -----  -------  -------  ---------
Cash flow from investing activities:
  Purchases of equipment...................   (222)  (1,017)    (588)    (1,533)
  Purchases of marketable trading securi-
   ties....................................            (104)     (70)      (107)
  Proceeds from sale of marketable trading
   securities..............................             175       33
                                             -----  -------  -------  ---------
    Net cash used in investing activities..   (222)    (946)    (625)    (1,640)
                                             -----  -------  -------  ---------
Cash flow from financing activities:
  Principal payments on long-term debt.....    (14)     (76)               (202)
  Proceeds from long-term debt.............     25      148
  Payments of capital lease obligations....             (18)                (30)
  Proceeds from issuance of common stock...             152
  Proceeds from stockholder contribution...              68
  Dividends to stockholder.................   (186)    (857)    (575)      (487)
                                             -----  -------  -------  ---------
    Net cash used in financing activities..   (175)    (583)    (575)      (719)
                                             -----  -------  -------  ---------
Net increase in cash and cash equivalents..    210      215       93        (86)
Cash and cash equivalents, beginning of
 year......................................    --       210      210        425
                                             -----  -------  -------  ---------
Cash and cash equivalents, end of year.....  $ 210  $   425  $   303  $     339
                                             =====  =======  =======  =========
Supplemental disclosure of cash flow infor-
 mation:
  Cash paid for interest...................  $   2  $     4  $        $      21
  Cash paid for taxes......................  $      $        $        $      19
Supplemental disclosure of non-cash
 transactions:
  Marketable securities exchanged for
   accounts receivable.....................  $  84
  Capital lease obligations................         $   162
  Purchase of net assets of Diversified for
   Note Payable............................             175
</TABLE>    
 
                         The accompanying notes are an
             integral part of these combined financial statements.
 
 
                                      F-20
<PAGE>
 
                       SERVICE MANAGEMENT USA, INC. AND
                   
                DIVERSIFIED MANAGEMENT SERVICES USA, INC.     
 
                    NOTES TO COMBINED FINANCIAL STATEMENTS
                                (IN THOUSANDS)
 
NOTE 1--BUSINESS AND ORGANIZATION
   
  Service Management USA, Inc. and Diversified Management Services USA, Inc.
(the "Company") provide contract facility management and janitorial services
to commercial establishments located throughout the United States.     
 
  Service Management USA, Inc. was incorporated in October 1994. Prior to
incorporation, the entity was operated as a sole proprietorship. Diversified
Management Services USA, Inc. was incorporated in November 1996 via the
purchase of the net assets of an operating business.
 
  The accompanying financial statements represent the financial position,
operating results and cash flows of Service Management USA, Inc. and
Diversified Management Services USA, Inc., which have been presented on a
combined basis due to common ownership and common management. All intercompany
activity and balances have been eliminated.
 
  On January 8, 1998, the Company entered into a Letter of Intent with
Consolidation Capital Corporation ("CCC") for the potential sale of Service
Management USA, Inc. and Diversified Management Services USA, Inc. to CCC.
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 Use of Estimates
 
  The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
 
 Revenue Recognition
 
  Revenues are recognized as services are performed.
 
 Cash and Cash Equivalents
 
  For purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less at the date
of purchase to be cash equivalents.
 
 Property and Equipment
 
  Property and equipment are depreciated using straight-line and accelerated
methods over their estimated useful lives ranging from three to seven years.
 
 Intangibles
 
  Intangible assets consist of $172 allocated to customer contracts purchased
in the organization of Diversified Management Services USA, Inc. and are being
amortized over a period of five years, which is deemed to be the estimated
period benefited.
 
                                     F-21
<PAGE>
 
                       SERVICE MANAGEMENT USA, INC. AND
                   DIVERSIFIED MANAGEMENT SERVICES USA, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
                                (IN THOUSANDS)
 
 
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
 
 Marketable Securities
 
  The Company's marketable securities consist of investments in certain
equities and mutual funds and are classified as trading. Accordingly, any
realized or unrealized gains and losses are recorded in the period incurred.
 
 Fair Value of Financial Instruments
 
  The carrying amount of cash and cash equivalents, accounts receivable,
accounts payable, and accrued liabilities as reflected in the financial
statements approximates fair value because of the short-term maturity of these
instruments. The carrying amounts of long-term debt approximates fair value as
the interest rates approximate market rates for debt with similar terms and
average maturities.
 
 Income Taxes
 
  The Company has elected to be treated as cash basis S-Corporation for
federal income tax purposes and accordingly, any liabilities for income taxes
are the direct responsibility of the stockholder. Therefore, no provision or
liability for federal income taxes has been included in the financial
statements. The Company is subject to income and franchise taxes in certain
states, which has been appropriately reflected in the financial statements.
 
  There are differences between the financial statement carrying amounts and
the tax bases of existing assets and liabilities primarily related to accounts
receivable and accounts payable. At December 31, 1996, the Company's net
assets for financial reporting purposes exceeds the tax basis by approximately
$800.
 
  The unaudited pro forma income tax information included in the Statement of
Operations is presented in accordance with Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," as if the Company had been
subject to federal income taxes for the entire periods presented.
 
 Unaudited Interim Financial Information
   
  The interim financial information for the nine month periods ended September
30, 1996 and 1997 have been prepared from the unaudited financial records of
the Company and in the opinion of management, reflect all adjustments,
consisting only of normal recurring items, necessary for a fair presentation
of the financial position, results of operations and cash flows for the
interim periods presented.     
 
 Concentrations of Credit Risk
   
  Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of trade accounts receivable. Receivables
are not collateralized and, accordingly, the Company performs on-going credit
evaluations to reduce the risk of loss.     
 
  The Company also maintains bank accounts at one financial institution. The
balances are insured by the Federal Deposit Insurance Corporation up to $100.
At December 31, 1996, the Company's uninsured cash balances totaled $433.
 
 
                                     F-22
<PAGE>
 
                       SERVICE MANAGEMENT USA, INC. AND
                   DIVERSIFIED MANAGEMENT SERVICES USA, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
                             
                          (DOLLARS IN THOUSANDS)     
 
NOTE 3--PROPERTY AND EQUIPMENT
 
  Property and equipment consists of the following:
 
<TABLE>
<CAPTION>
                                                                 DECEMBER 31,
                                                                 --------------
                                                                 1995    1996
                                                                 ------ -------
   <S>                                                           <C>    <C>
   Cleaning equipment........................................... $ 237  $ 1,096
   Automobiles..................................................    40      230
   Computer equipment...........................................    15       58
   Office equipment.............................................             25
   Furniture and fixtures.......................................    16        8
                                                                 -----  -------
                                                                   308    1,417
   Accumulated depreciation.....................................   (87)    (258)
                                                                 -----  -------
                                                                 $ 221  $ 1,159
                                                                 =====  =======
</TABLE>
 
  Depreciation expense for the year ended December 31, 1995 and 1996 was $24
and $223, respectively. Certain equipment with a gross balance of $162
represents amounts under capital leases.
 
NOTE 4--CREDIT FACILITIES
 
  Long-term debt consists of the following:
 
<TABLE>   
<CAPTION>
                                                                 DECEMBER 31,
                                                                 --------------
                                                                 1995    1996
                                                                 ------ -------
   <S>                                                           <C>    <C>
   Notes payable, vehicles, various monthly payments including
    interest at rates ranging from 8% to 18%, maturing at
    various dates from December 1997 through 2001............... $  11  $   122
   Note payable, issued in connection with the purchase of net
    assets for Diversified Management Services USA, Inc.,
    monthly principal payments of $20 beginning December 1,
    1996, interest of 8%........................................            137
   Current maturities...........................................           (165)
                                                                 -----  -------
                                                                 $  11  $    94
                                                                 =====  =======
</TABLE>    
 
  Principal payments required under long-term debt obligations are as follows:
 
<TABLE>
   <S>                                                                     <C>
   1997................................................................... $ 165
   1998...................................................................    21
   1999...................................................................    24
   2000...................................................................    27
   2001...................................................................    22
                                                                           -----
                                                                           $ 259
                                                                           =====
</TABLE>
 
 Line of Credit
 
  In April 1997, the Company obtained a revolving line of credit for
borrowings of up to $1,000. The line of credit, which expires on April 30,
1998, bears interest at LIBOR plus 2%, and is limited to 80% of eligible trade
accounts receivable.
 
  Additionally, in December 1997 an additional $250 facility was obtained with
a maturity of two months at an interest rate of LIBOR plus 2%.
 
                                     F-23
<PAGE>
 
                       SERVICE MANAGEMENT USA, INC. AND
                   DIVERSIFIED MANAGEMENT SERVICES USA, INC.
 
              NOTES TO COMBINED FINANCIAL STATEMENTS--(CONTINUED)
                             
                          (DOLLARS IN THOUSANDS)     
 
 
NOTE 4--CREDIT FACILITIES (CONTINUED)
 
 Equipment Facility
   
  In April 1997, the Company obtained an equipment facility which provides for
the Company to borrow up to $1,500 under term notes until April 30, 1998. As
of December 1997, approximately $1,000 had been utilized under this facility
to purchase equipment. These $1,000 term notes bear interest at 7.7% and
require 35 monthly installments of principal and interest of approximately
$31.     
   
  Both the line of credit and the equipment notes contain, among other
provisions, maintenance of certain financial covenants and ratios including
tangible net worth and cash flow coverage, restrictions on dividends and
indebtedness, and are collateralized by the majority of the Company's assets,
and are personally guaranteed by the stockholder and spouse.     
 
NOTE 5--COMMITMENTS
 
 Lease Commitments
 
  In January 1998, the Company began leasing its primary office facility from
a company owned by the Company's stockholder. No formal lease terms have been
established.
 
  The Company also leases office space in various states on a month-to-month
basis. Rent expense under these lease arrangements for December 31, 1995 and
1996 were $16 and $28, respectively.
 
  Additionally, in November 30, 1996, the Company acquired approximately $162
of equipment under leases qualifying as capital in connection with the
purchase of Diversified Management Services USA, Inc. The balance on these
capital lease obligations were paid in full in fiscal 1997.
   
 Guarantee     
   
  The Company's stockholder has obtained a mortgage of $1,280 in connection
with the acquisition of a building. Service Management USA, Inc. is a
guarantor of this obligation. Under the terms of the proposed transaction with
CCC (see Note 1), Service Management USA, Inc. would be released from this
guarantee.     
 
NOTE 6--EMPLOYEE BENEFIT PLAN
 
  In November 1997, the Company established a profit sharing plan under the
provisions of Section 401(k) of the Internal Revenue Code. Virtually all
employees are eligible to participate in the plan. Employees can contribute up
to 15% of their gross salary to the plan, and the Company makes matching
contributions of up to 3%.
 
NOTE 7--JOINT VENTURES
 
  In August 1997 and November 1997, the Company's stockholder organized
Alliance Management Services, LLC and Interstate Management Services, LLC to
provide similar services as the Company. The Company's stockholder owns a 50%
and 70% interest in these entities, respectively. There were no operations
through September 30, 1997.
   
NOTE 8--SUBSEQUENT EVENTS     
   
  During the fourth quarter of 1997, distributions of approximately $900 were
made to the Company's stockholder.     
 
                                     F-24
<PAGE>
 
                                    PART II
                    INFORMATION NOT REQUIRED IN PROSPECTUS
 
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
 
  The following table sets forth fees payable to the Securities and Exchange
Commission and other estimated expenses expected to be incurred in connection
with issuance and distribution of securities being registered. All such fees
and expenses shall be paid by the Company.
 
<TABLE>
   <S>                                                                 <C>
   Securities and Exchange Commission Registration Fee................ $145,582
   Nasdaq National Market Listing Fee.................................   17,500
   Printing Expenses..................................................   75,000*
   Accounting Fees and Expenses.......................................   25,000*
   Legal Fees and Expenses............................................   50,000*
   Miscellaneous......................................................   86,918*
                                                                       --------
     Total............................................................ $400,000
                                                                       ========
</TABLE>
 
- --------
* Estimate
 
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
 
  Section 102(b)(7) of the Delaware General Corporation Law (the "DGCL")
permits a corporation, in its certificate of incorporation, to limit or
eliminate, subject to certain statutory limitations, the liability of
directors to the corporation or its stockholders for monetary damages for
breaches of fiduciary duty, except for liability (a) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (b) for
acts or omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, (c) under Section 174 of the DGCL, or (d) for any
transaction from which the director derived an improper personal benefit.
Article 10 of the Company's Restated Certificate of Incorporation provides
that the personal liability of directors of the Company is eliminated to the
extent permitted by Section 102(b)(7) of the DGCL.
 
  Section 145 of the DGCL (i) requires a corporation to indemnify for
expenses, including attorney's fees, incurred by a director or officers who
has been successful in defending any claim or proceeding in which the director
or officer is involved because of his or her position with the corporation,
(ii) permits indemnification (a) for judgments, fines, expenses and amounts
paid in settlement in the case of a claim by a party other than the
corporation or in the right of the corporation, even where a director or
officer has not been successful, in cases where the director or officer acted
in good faith and in a manner that he or she reasonably believed was in or not
opposed to the best interests of the corporation provided, in the case of a
criminal proceeding, that the director or officer had no reason to believe his
or her conduct was unlawful or (b) for expenses in the case of a claim or
proceeding by or in the right of the corporation, including a derivative suit
(but not judgments, fines or amounts in settlement), if the director or
officer acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the corporation and has not been
adjudged liable to the corporation unless a court determines that, despite
such adjudication but in view of all of the circumstances, he or she is
entitled to indemnification, and (iii) permits the advancement of expenses to
directors and officers who are defending an action, lawsuit or proceeding upon
receipt of an undertaking for the repayment of such advance if it is
ultimately determined that the director or officer has not met the applicable
standard of conduct and is, therefore, not entitled to be indemnified. Section
145 also provides that the permissive indemnification described above is to be
made upon a determination that the director or officer has met the required
standard of conduct by (a) a majority of disinterested directors, (b) a
committee of disinterested directors designated by a majority of such
directors, (c) independent legal counsel or (d) the stockholders.
 
  The Company has entered into Indemnity Agreements because the Board believes
that the Company's directors' and officers' insurance does not fully protect
the directors and executive officers and that the absence of Indemnity
Agreements may threaten the quality and stability of the governance of the
Company by reducing the Company's ability to attract and retain qualified
persons to serve as directors and executive officers of the
 
                                     II-1
<PAGE>
 
Company, and by deterring such persons in the making of entrepreneurial
decisions for fear of later legal challenge. In addition, the Board of
Directors believes that the Indemnity Agreements complement the
indemnification rights and liability protections currently provided directors
and executive officers of the Company under the Amended and Restated Bylaws.
These rights and protections were designed to enhance the Company's ability to
attract and retain highly qualified individuals to serve as directors and
executive officers in view of the high incidence of litigation, often
involving large amounts, against publicly-held companies and the need to
provide such persons with reliable knowledge of the legal risks to which they
are exposed. The Indemnity Agreements complement these rights and protections
by providing directors and executive officers with contractual rights to
indemnification, regardless of any amendment to or repeal of the
indemnification provisions in the Bylaws. The Company's Amended and Restated
Bylaws provide that the Company shall indemnify to the fullest extent
authorized or permitted by law directors and officers of the Company who have
been made or threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he or she is
or was a director or officer of the Company.
 
  The Indemnity Agreements are predicated upon Section 145(f) which recognizes
the validity of additional indemnity rights granted by contractual agreement.
The Indemnity Agreements alter or clarify statutory indemnity provisions, in a
manner consistent with the Company's Amended and Restated Bylaws, in the
following respects; (i) indemnification is mandatory, rather than optional, to
the full extent permitted by law, including partial indemnification under
appropriate circumstances, except that the Company is not obligated to
indemnify an indemnitee with respect to a proceeding initiated by the
indemnitee (unless the Board should conclude otherwise), payments made by an
indemnitee in a settlement effected without the Company's written consent,
payments that are found to violate the law, conduct found to constitute bad
faith or active and deliberate dishonesty or short-swing profit liability
under Section 16(b) of the Exchange Act or to the extent that indemnification
has been determined to be unlawful in an arbitration proceeding conducted
pursuant to the provisions of the Indemnity Agreement; (ii) prompt payment of
litigation expenses in advance is mandatory, rather than optional, provided
the indemnitee undertakes to repay such amounts if it is ultimately determined
that the indemnitee is not entitled to be indemnified and provided the
indemnitee did not initiate the proceeding; (iii) any dispute arising under
the Indemnity Agreement is to be resolved through an arbitration proceeding,
which will be paid for by the Company unless the arbitrator finds that the
indemnitee's claims or defenses were frivolous or in bad faith, unless such
arbitration is inconsistent with an undertaking given by the Company, such as
to the Securities and Exchange Commission, that the Company will submit to a
court the question of indemnification for liabilities under the Securities Act
of 1933, as amended, and be governed by the final adjudication of such issue;
and (iv) mandatory indemnification shall be paid within 45 days of the
Company's receipt of a request for indemnification unless a determination is
made that the indemnitee has not met the relevant standards for
indemnification by the Board of Directors, or if a quorum of the directors is
not obtainable, at the election of the Company, either by independent legal
counsel or a panel of arbitrators.
 
  The Company maintains a directors' and officers' liability insurance policy
covering certain liabilities which may be incurred by directors and officers
in connection with the performance of their duties. The entire premium for
such insurance is paid by the Company.
 
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
 
  In February 1997, Jonathan J. Ledecky, the Company's Chairman and Chief
Executive Officer, founded the Company's predecessor, Ledecky Brothers L.L.C.
On September 19, 1997, Jonathan Ledecky exchanged his 100% interest in Ledecky
Brothers L.L.C. for 4,411,765 shares of the Company's Common Stock, or 100% of
the outstanding shares. The issuances of securities by Ledecky Brothers L.L.C.
and the Company to Jonathan Ledecky were made in reliance upon the exemption
from registration under the Securities Act of 1933, as amended, in Section
4(2).
 
                                     II-2
<PAGE>
 
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
 
  (a) The following exhibits are or will be filed as part of this registration
statement:
 
<TABLE>   
<CAPTION>
                                                            INCORPORATED BY
                                                            REFERENCE TO THE
                                                           EXHIBIT INDICATED
                                                         BELOW TO THE COMPANY'S
                                                         REGISTRATION STATEMENT
 EXHIBIT                                                      ON FORM S-1
 NUMBER  DESCRIPTION                                      (FILE NO. 333-36193)
 ------- -----------                                     ----------------------
 <S>     <C>                                             <C>
  3.01   Restated Certificate of Incorporation of
         Consolidation Capital Corporation.                       3.01

  3.02   Amended and Restated Bylaws of Consolidation
         Capital Corporation.                                     3.02

  5.01   Opinion of Morgan, Lewis & Bockius LLP as to
         the legality of the securities being
         registered.                                               *

 10.01   Consolidation Capital Corporation 1997 Long-
         Term Incentive Plan.                                      *

 10.02   Consolidation Capital Corporation 1997 Non-
         Employee Directors' Stock Plan.                         10.02

 10.03   Consolidation Capital Corporation 1997
         Employee Stock Purchase Plan.                           10.03

 10.04   Consolidation Capital Corporation 1997
         Section 162(m) Bonus Plan.                              10.04

 10.05   Consolidation Capital Corporation Executive
         Deferred Compensation Plan.                               **

 10.06   Employment Agreement between the Company and
         Jonathan J. Ledecky.                                    10.05

 10.07   Employment Agreement between the Company and
         Timothy C. Clayton.                                     10.06

 10.08   Employment Agreement between the Company and
         F. Traynor Beck.                                        10.07

 10.09   Employment Agreement between the Company and
         David Ledecky.                                          10.08

 10.10   Form of Indemnity Agreement for Executive
         Officers and Directors of the Company.                  10.09

 23.01   Consents of Price Waterhouse LLP.                         **

 23.02   Consent of Morgan, Lewis & Bockius LLP
         (included in opinion filed as Exhibit 5.1).               *

 24.01   Power of Attorney (included on signature page
         of this registration statement).                          *

 27.01   Financial Data Schedule.                                  *
</TABLE>    
- --------
   
*  Previously filed.     
   
** Filed herewith.     
 
  (b) Financial statement schedules have been omitted because they are
inapplicable, are not required under applicable provisions of Regulation S-X,
or the information that would otherwise be included in such schedules is
contained in the registrant's financial statements or accompanying notes.
 
ITEM 17. UNDERTAKINGS.
 
  Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be governed by
the final adjudication of such issue.
 
 
                                     II-3
<PAGE>
 
  The undersigned registrant hereby undertakes that:
 
    (1) To file, during any period in which any offers or sales are being
  made, a post-effective amendment to the registration statement;
 
      (i) To include any prospectus required by Section 10(a)(3) of the
    Securities Act of 1933;
 
      (ii) To reflect in the prospectus any facts or events arising after
    the effective date of the registration statement (or the most recent
    post-effective amendment thereof) which, individually or in aggregate,
    represent a fundamental change in the information set forth in the
    registration statement. Notwithstanding the foregoing, any increase or
    decrease in volume of securities offered (if the total dollar value of
    securities offered would not exceed that which was registered) and any
    deviation from the low or high and of the estimated maximum offering
    range may be reflected in the form of prospectus filed with the
    Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
    volume and price represent no more than 20 percent change in the
    maximum aggregate offering price set forth in the "Calculation of
    Registration Fee" table in the effective registration statement.
 
      (iii) To include any material information with respect to the plan of
    distribution not previously disclosed in the registration statement or
    any other material change to such information in the registration
    statement.
 
    (2) That for the purpose of determining any liability under the Act each
  such post-effective amendment may be deemed to be a new registration
  statement relating to the securities being offered therein and the offering
  of such securities at the time may be deemed to be the initial bona fide
  offering thereof.
 
    (3) To remove from registration by means of a post-effective amendment
  any of the securities which are being registered which remain unsold at the
  termination of the offering.
 
    (4) To supply by means of a post-effective amendment, Rule 424(c)
  supplement or information incorporated by reference, all information
  concerning a material transaction, and the company being acquired involved
  there, that was not the subject of and included in the registration
  statement when it became effective.
 
                                     II-4
<PAGE>
 
                                  SIGNATURES
   
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS REGISTRATION STATEMENT ON TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF WASHINGTON,
DISTRICT OF COLUMBIA, ON JANUARY 20, 1998.     
 
                                          Consolidation Capital Corporation
                                               
                                                                           
                                          By:  /s/ Jonathan J. Ledecky      
                                             ----------------------------------
                                             JONATHAN J. LEDECKY CHAIRMAN AND
                                                  CHIEF EXECUTIVE OFFICER

       
  PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>     
<CAPTION> 
 
              SIGNATURE                            TITLE                            DATE
              ---------                            -----                            ----
<S>                                    <C>                                     <C> 
    /s/ Jonathan J. Ledecky             Chairman and Chief Executive           January 20, 1998 
- -------------------------------------      Officer (Principal Executive  
         JONATHAN J. LEDECKY               Officer)                      

 
               *                        Executive Vice President, Chief        January 20, 1998 
- -------------------------------------      Financial Officer and         
         TIMOTHY C. CLAYTON                Treasurer (Principal Financial 
                                           and Accounting Officer         

                                                 
               *                        Executive Vice President, Chief        January 20, 1998 
- -------------------------------------      Administrative Officer and         
            DAVID LEDECKY                  Director                        
 
                                                         
               *                        Director                               January 20, 1998 
- -------------------------------------                             
          VINCENT E. EADES
 
                                                            
               *                        Director                               January 20, 1998 
- -------------------------------------                              
          W. RUSSELL RAMSEY
 
                                                            
               *                        Director                               January 20, 1998 
- -------------------------------------                              
            M. JUDE REYES
</TABLE>      


           
    
By: /s/ F. Traynor Beck  
   ----------------------------------
   F. Traynor Beck, Attorney in Fact,
   pursuant to powers of attorney
   previously filed as part of this
   Registration Statement      
 

                                     II-5
<PAGE>
 
                                  
                               EXHIBIT INDEX     
 
<TABLE>   
<CAPTION>
                                                            INCORPORATED BY
                                                            REFERENCE TO THE
                                                           EXHIBIT INDICATED
                                                         BELOW TO THE COMPANY'S
                                                         REGISTRATION STATEMENT
 EXHIBIT                                                      ON FORM S-1
 NUMBER  DESCRIPTION                                      (FILE NO. 333-36193)
 ------- -----------                                     ----------------------
 <S>     <C>                                             <C>
  3.01   Restated Certificate of Incorporation of
         Consolidation Capital Corporation.                       3.01

  3.02   Amended and Restated Bylaws of Consolidation
         Capital Corporation.                                     3.02

  5.01   Opinion of Morgan, Lewis & Bockius LLP as to
         the legality of the securities being
         registered.                                               *

 10.01   Consolidation Capital Corporation 1997 Long-
         Term Incentive Plan.                                      *

 10.02   Consolidation Capital Corporation 1997 Non-
         Employee Directors' Stock Plan.                         10.02

 10.03   Consolidation Capital Corporation 1997
         Employee Stock Purchase Plan.                           10.03

 10.04   Consolidation Capital Corporation 1997
         Section 162(m) Bonus Plan.                              10.04

 10.05   Consolidation Capital Corporation Executive
         Deferred Compensation Plan.                               **

 10.06   Employment Agreement between the Company and
         Jonathan J. Ledecky.                                    10.05

 10.07   Employment Agreement between the Company and
         Timothy C. Clayton.                                     10.06

 10.08   Employment Agreement between the Company and
         F. Traynor Beck.                                        10.07

 10.09   Employment Agreement between the Company and
         David Ledecky.                                          10.08

 10.10   Form of Indemnity Agreement for Executive
         Officers and Directors of the Company.                  10.09

 23.01   Consents of Price Waterhouse LLP.                         **

 23.02   Consent of Morgan, Lewis & Bockius LLP
         (included in opinion filed as Exhibit 5.1).               *

 24.01   Power of Attorney (included on signature page
         of this registration statement).                          *

 27.01   Financial Data Schedule.                                  *
</TABLE>    
- --------
   
*  Previously filed.     
   
** Filed herewith.     

<PAGE>
 
                                                                   EXHIBIT 10.05

                       CONSOLIDATION CAPITAL CORPORATION

                     EXECUTIVE DEFERRED COMPENSATION PLAN
                     ------------------------------------

     1. Purpose.  The purpose of this Executive Deferred Compensation Plan (the
        -------                                                                
"Plan") of Consolidation Capital Corporation, a Delaware corporation (the
"Company"), is to benefit selected management or highly compensated employees of
the Company and its subsidiaries by allowing such employees to defer receipt of
compensation

     2. Definitions.  Unless a different meaning is plainly implied by the
        -----------                                                       
context, the following terms as used in the Plan shall have the following
meanings:

     (a) "Beneficiary" shall mean such person or persons designated  pursuant
to  Section 7(b) hereof to receive benefits after the death of the Participant.

     (b) "Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, or any successor statute.

     (c) "Compensation" shall mean the Participant's base salary and cash bonus
payable in any calendar year, determined prior to giving effect to Compensation
Deferrals hereunder and other salary reduction amounts which are not included in
the Participant's gross income under Section 125, 401(k), 402(h) or 403(b) of
the Code.

     (d) "Compensation Deferral" shall mean the amount or amounts of the
Participant's Compensation deferred under the provisions of Section 5.  Such
term shall also include any additional amount that the Company determines to
credit on behalf of the Participant.

     (e) "Deferral Account" shall mean the account maintained under the Trust
Fund to reflect the Participant's Compensation Deferrals made pursuant to
Section 5 hereof and any other credits or debits thereto.

     (f) "Deferral Year" shall mean each calendar year or the period beginning
on the effective date of the Election Form and ending on December 31 of the
calendar year which contains the effective date during which the Participant
makes, or is entitled to make, Compensation Deferrals under Section 4 hereof.

     (g) "Election Form" shall mean the form prescribed by the Company on which
the Participant elects to participate in the Plan.  Such form shall designate,
as provided in the Plan, certain terms relating to the Participant's
Compensation Deferrals.

     (h) "Trustee" shall mean the trustee under the Trust Agreement.

     (i) "Trust Agreement" shall mean the agreement entered into between the
Company and the Trustee that establishes the Trust Fund.

                                       1
<PAGE>
 
     (j) "Trust Fund" shall mean the corpus of the trust established pursuant to
the Trust Agreement, which corpus includes amounts deposited by the Company
representing Compensation Deferrals.

     (k) "Unforeseeable Emergency" shall mean a severe financial hardship to an
Participant resulting from a sudden and unexpected illness or accident of the
Participant or a dependent (within the meaning of Section 152(a) of the Code),
of the Participant, loss of the Participant's property due to casualty, or other
similar extraordinary and unforeseeable circumstances, arising from events
beyond the Participant's control.  Whether circumstances constitute an
Unforeseeable Emergency depends on the facts of each case, as determined by the
Company, but in any case does not include a hardship that may be relieved:

          (i)   through reimbursement or compensation by insurance or otherwise;

          (ii)  by liquidation of the Participant's assets to the extent that
     liquidation itself would not cause such a severe financial hardship; or

          (iii) by ceasing to defer receipt of any compensation not yet earned.

The need to send an Participant's child to college and the desire to purchase a
home shall not constitute an Unforeseeable Emergency.

     3.  Participation.  Participation in the Plan shall be limited to a select
         -------------                                                         
group of management and highly compensated employees of the Company and its
subsidiaries.  From that group, the Company shall select, in its sole
discretion, employees who may participate in the Plan.  The Company may
terminate the participation of any Participant at any time.

     4.  Period During Which Compensation Deferrals Are Permitted.
         -------------------------------------------------------- 

     (a)   For any calendar year that the Participant has been designated by the
Company to participate under the Plan, the Participant may elect, on an Election
Form, to commence Compensation Deferrals for the period beginning on the first
day of such year and ending on the last day of such year.

     (b)  The Participant shall not be eligible to make Compensation Deferrals
for any calendar year for which the Participant is not designated by the Company
as an eligible participant under the Plan.  Designation to participate in any
calendar year shall not confer upon the Participant any right to participate in
any subsequent year.  In addition, the Participant shall not be eligible to make
Compensation Deferrals after the earlier of the following dates:

          (i)  His termination of employment for any reason; or

          (ii) The effective date of the termination of the Plan.

                                       2
<PAGE>
 
     5.  Compensation Deferral Elections.
         ------------------------------- 

     (a) For each Deferral Year,  the Participant may elect, on an Election
Form, to defer the receipt of all or a portion of his Compensation which he is
entitled to receive from the Company during such Deferral Year.  Such Election
Form shall set forth the amount of such Compensation Deferral (in whole
percentage amounts).  Such Election Form shall be effective only for the
Deferral Year for which it is applicable and shall not continue in effect for
any subsequent Deferral Year.

     (b) Compensation Deferrals shall be withheld from each payment of
Compensation by the Company to the Participant based upon the percentage amount
elected by the Participant under Section 5(a) hereof.

     (c) The Company may, in its discretion, credit additional amounts on behalf
of any Participant to be deferred in the manner set forth in an Election Form.


     6.  Investment of Deferrals; Trust Account.
         -------------------------------------- 

     (a)  As soon as practicable (but in any event within thirty days) after
Compensation Deferrals are withheld pursuant to Section 5(b), the Company shall
deposit (along with similar amounts for other Participants) an equal amount into
the Trust Fund, and such amounts shall be invested by the Trustee in accordance
with the terms of the Trust Agreement, taking into account, to the extent the
Trustee deems advisable, instructions received from the Participant.  The
Trustee shall separately account, through the establishment of one or more
Deferral Accounts, for Compensation Deferrals for each Deferral Year, and the
investment performance attributable thereto.

     (b)  Deferral Accounts shall be reduced by any payments made to or on
behalf of the Participant as provided in Section 7, as well as by commissions or
other fees charged in connection with effecting securities transactions under
the Deferral Account.

     (c)  On any given date, the value of a Deferral Account shall be determined
by the value (as determined by the Trustee) of the investments attributable
thereto and held under the Trust Fund.

     7.  Payments.
         -------- 

     (a)  Except as otherwise provided in this Section 7, the Company shall
direct the Trustee to pay to the Participant an amount equal to the value of the
Participant's Deferral Accounts at such times and in such manner as specified in
the Election Form.  The Company may, in its discretion, permit the Participant
to file a new Election Form to extend the time at which payments are to commence
or the period over which the payments are to be made, provided that such new
Election Form is filed at such time in advance as Company's counsel determines
is likely to avoid federal income taxation at a time prior to the time that
payments are actually made.

                                       3
<PAGE>
 
     (b) Upon the death of the Participant prior to the complete payment of 
amounts credited to his Deferral Accounts, the Company shall direct the Trustee 
to pay the balance of such Accounts in a lump sum as soon as practicable after 
the Participant's death. For the purposes of this Section 7(b), the 
Participant's Beneficiary shall be the person or persons so designated by the 
Participant in the Election Form. In the event the Participant fails to properly
designate a Beneficiary, his Beneficiary shall be the person or persons in the 
first of the following classes of successive preference Beneficiaries surviving 
at the death of the Participant: the Participant's (1) surviving spouse or (2) 
estate.

     (c) The Participant may request at any time a withdrawal of part or all of 
the amount then credited to his Deferral Account on account of an Unforeseeable 
Emergency by submitting a written request to the Company accompanied by evidence
that his financial condition constitutes an Unforeseeable Emergency. The Company
shall review the Participant's request and determine the extent, if any, to 
which such request is justified. If determined by the Company to be justified in
whole or in part, the Company shall direct the Trustee to pay to the Participant
the appropriate amount. Any such withdrawal shall be limited to an amount 
reasonably necessary to meet the Unforeseeable Emergency.

     (d) The Participant may at any time request a withdrawal of all or any 
portion of the amount then credited to his Deferral Accounts. If so requested, 
the Company shall direct the Trustee to withdraw the requested amount from the 
Executive's Deferral Accounts, provided, however, that only 90% of the amount so
withdrawn shall be paid to the Executive, and 10% of the amount so withdrawn 
shall be paid to the Company and forfeited by the Executive.

     (e) The Company or the Trustee shall have the right to deduct from the 
Deferral Accounts any taxes required to be withheld on behalf of the Participant
by any federal, state or local taxing authority in respect of amounts deferred 
or paid hereunder.

     8.  Amendments; Termination.  The Company may amend, alter, suspend, 
         ----------------------- 
discontinue, or terminate the Plan at any time; provided, however, that, without
                                                ----------------- 
the consent of an affected Participant, no such action may materially impair 
the rights of such Participant with respect to any amount then credited to his 
Deferral Account.

                                       4
<PAGE>
 
9. Status of Company Obligation.
   ----------------------------

     (a) The Company shall have no responsibility for the investment of assets 
credited to Deferral Accounts, or the consequences thereof. The Company's 
obligation hereunder shall be limited to payment of an amount equal to the value
of the Participant's Deferral Account under the Trust Fund. To the extent the 
Trustee is precluded from making payments to the Participant by reason of the 
Company becoming "Insolvent" as defined in the Trust Agreement, the Company 
shall establish deferral accounts on its books equal to the value of the 
Participant's Deferral Accounts immediately prior to such insolvency to reflect 
the obligation of the Company to pay deferred amounts to the Participant.

     (b) Notwithstanding the establishment of the Trust  Fund, it is the 
intention of the parties that the obligation of the Company to make payments 
hereunder be unfunded for purposes of federal income taxation and for purposes 
of Title I of the Employee Retirement Income  Security Act of 1974. Accordingly,
the assets of the Trust Fund shall at all times remain subject to the claims of 
the Company's general creditors and neither the Participant nor any other 
persons shall have any interest in any specific asset or assets of the Company
or the Trust Fund by reason of any Deferral Account, nor any rights to receive
distribution of his Deferral Account except and to the extent expressly provided
hereunder.

     (c) The rights of the Participant and the Beneficiaries to the amounts held
in the Deferral Accounts are unsecured and shall be subject to the creditors of 
the Company. With respect to the payment of amounts held under the Deferral 
Accounts, the Participant and his Beneficiaries have the status of unsecured 
creditors of the Company. Any obligation of the Company hereunder shall be an 
unsecured obligation of the Company and not of any other person.

     10. Arbitration. Any claim or controversy arising among or between any 
         -----------
Participant and the Company pertaining to those matters contained herein shall 
be settled by arbitration under the National Rules for the Resolution of 
Employment Disputes of the American Arbitration Association (the "Association").
There shall be three arbitrators, one of whom shall be designated by each of the
Company and the Participant, and the third arbitrator shall be selected by 
mutual agreement of the first two arbitrators from a list designated by the  
Association, and failing their ability to reach agreement, by the Association 
itself. The arbitrators shall not have the authority to add to, detract from, or
modify any provision hereof nor to award punitive damages to any injured party. 
The arbitrators shall have the authority to order reimbursement of costs, 
including those incurred to enforce the terms of the Plan, and interest thereon 
in the event the arbitrators determine that the Company has materially breached 
its obligations under the Plan. A decision by a majority of the arbitration 
panel shall be final and binding. Judgment may be entered on the arbitrators' 
award in any court having jurisdiction. The direct expense of any arbitration 
proceeding shall be borne by the Company. The arbitration proceeding shall be 
held in the city where the Company is located.

     11. Successor to the Company. The Company will require any successor or 
         ------------------------
assign (whether direct or indirect, by purchase, merger, consolidation or 
otherwise) to all or substantially 

                                       5
<PAGE>
 
all of the business and/or assets of the Company, by agreement in form and 
substance satisfactory to each Participant in his discretion, expressly, 
absolutely and unconditionally to assume and agree to perform the obligations 
under the Plan in the same manner and to the same extent that the Company would 
be required to perform them if no such succession or assignment had taken place.
In the event of any failure of the Company to obtain such agreement, then, prior
to the effectiveness of any such succession or assignment, the Company shall 
direct the Trustee to pay to each Participant an amount equal to the value of 
the Participant's Deferral Accounts.

     12. Miscellaneous.
         -------------

     (a) The Participant represents and warrants on each date that an Election  
Form is filed that he is able to bear the economic risk of deferring 
compensation pursuant to the Plan and can afford to sustain a total loss of such
compensation and has such knowledge and experience in financial and business 
matters that he is capable of evaluating the merits and risks of the proposed 
deferral. The Participant has received all information that he considers 
necessary or appropriate for deciding whether to defer compensation, including 
the Company's Prospectus dated November 25, 1997, and as may be supplemented 
thereafter. The Participant further represents that he has had an opportunity to
ask questions and receive answers from the Company concerning any and all 
matters relating to, without limitation, the terms and conditions of the Plan 
and the business, operations and financial condition of the Company. The 
Participant has asked any and all questions in the nature described in the 
preceding sentence and all questions have been answered to their satisfaction.

     (b) If the Company shall receive evidence satisfactory to it that the 
Participant or any Beneficiary entitled to receive any benefit under the Plan 
is, at the time when such benefit becomes payable, a minor, or is physically or 
mentally incompetent to receive such benefit and to give a valid release 
therefor, and that another person or an institution is then maintaining or has 
custody of the Participant or Beneficiary and that no guardian, committee or 
other representative of the estate of the Participant or Beneficiary shall have
been duly appointed, the Company may make payment of such benefit otherwise
payable to the Participant or Beneficiary to such other person or institution,
including a custodian under a Uniform Gifts to Minors Act, or corresponding
legislation (who shall be an adult, a guardian of the minor or a trust company),
and the release of such other person or institution shall be a valid and
complete discharge for the payment of such benefit.

     (c) The Plan shall in all respects be construed according to the laws of 
the State of Delaware.

     (d) Nothing contained in the Plan shall be construed as a contract or 
guarantee of the right of the Participant to be, or remain as, an employee of 
the Company or to receive any, or any particular rate of, Compensation.

                                       6
<PAGE>
 
     (e) Except as provided in Section 11, the Participant's and Beneficiaries' 
interests in the Deferral Accounts may not be anticipated, sold, encumbered, 
pledged, mortgaged, charged, transferred, alienated, assigned nor become subject
to execution, garnishment or attachment.

     (f) For purposes of the Plan, notices and all other communications provided
for in the Plan shall be in writing and shall be deemed to have been duly given 
when delivered personally or mailed by United States registered or certified 
mail, return receipt requested, postage prepaid, or by nationally recognized 
overnight delivery service providing for a signed return receipt, addressed to 
the Participant at the home address set forth in the Company's records and to 
the Company at the address of its principal offices, provided that all notices 
to the Company shall be directed to the attention of the Chief Financial Officer
of the Company or to such other address as either party may have furnished to 
the other in writing in accordance herewith, except that notice of change of 
address shall be effective only upon its receipt.

     (g) The Plan, and the documents referenced herein, contain the entire 
understanding between the Company and the Participant with respect to the 
payment of non-qualified elective deferred compensation by the Company to the 
Participant.

     (h) The paragraph headings herein are for reference purposes only and are 
not intended in any way to describe, interpret, define or limit the extent or 
intent of the Plan or of any part hereof.

     (i) In the event any one or more provisions of the Plan are held to be 
invalid or unenforceable, such illegality or unenforceability shall not affect 
the validity or enforceability of the other provisions hereof and such other 
provisions shall remain in full force and effect unaffected by such invalidity 
or unenforceability.

                                       7

<PAGE>
 
                                                                   Exhibit 23.01

                      CONSENT OF INDEPENDENT ACCOUNTANTS
                      ----------------------------------


We hereby consent to the use in the Prospectus constituting part of this 
Registration Statement on Form S-1 of our reports dated (i) November 17, 1997, 
relating to the financial statement of Consolidation Capital Corporation; and 
(ii) January 20, 1998, relating to the combined financial statements of Service 
Management USA, Inc. and Diversified Management Services USA, Inc., which appear
in such Prospectus. We also consent to the reference to us under the heading 
"Experts" in such Prospectus.



PRICE WATERHOUSE LLP

Minneapolis, Minnesota
January 20, 1998


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission